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USDJPY Investors Build up Positions in the 130.90 Area

3/28/2023 1:30 PM

The yen remains under pressure, trading around 130.90 after the speech of the Governor of the Bank of Japan, Haruhiko Kuroda.

The official reiterated his commitment to an ultra-soft monetary policy and keeping the interest rate at a negative –0.10%, stressing that it is too early to discuss the transition to tightening monetary stimulus, as it will take longer to reach the 2.0% inflation target than previously predicted. Last week, statistics were released, according to which the consumer price index corrected by –1.0% YoY to 3.3%, and the price index for corporate services rose from 1.6% to 1.8%, according to preliminary estimates of experts by 1.5% against the backdrop of a recovery in tourist flows and an increase in staff costs.

The positions of the USD/JPY pair are supported by the recent decision of the US Federal Reserve to raise interest rates by 25 basis points. Unlike the Bank of Japan, the US regulator is "hawkish" despite the problems in the banking sector, and according to the rhetoric of the head of the department, Jerome Powell, the interest rate is likely to continue to adjust further, which could support the dollar in the medium term, strengthening the trading instrument to 134.70.

The long-term trend is downward, but at the moment, the trading instrument is in an upward correction. The nearest support is 130.90, if it is held, prices will rise to the resistance level of 134.70, if it is broken, the next target for purchases will be 138.70.

The medium-term trend is downward. Zone 132.48–131.96 was broken last week, and the next downside target is zone 2 (127.47–126.98). New sales may be opened on the correction after the test of the key trend resistance 135.37–134.83 with the target at last week's low 129.70.

Resistance levels: 134.70, 138.70. | Support levels: 130.90, 126.90.

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