Fundamental analysis of USD/JPY

 In the absence of economic triggers, the pair's fate remains in the hands of investors reacting to US unemployment insurance claims and strong inflation figures. Expectations that the Fed may end its monetary tightening cycle with the latest rate hike this month have been reinforced by recent data, making intervention less likely. A change in the BoJ's loose monetary policy could make USD/JPY more vulnerable. However, significant stimulus from Beijing could ease selling pressure. Today is relatively rich in US economic data. 

Notable events include import and export price data for June and preliminary Michigan consumer sentiment data. The export-import price index is expected to receive more attention than usual. However, more weight will be given to the Michigan consumer sentiment report, where the index is expected to rise from 64.4 to 65.5 in July. This week's US CPI report, producer price index and jobless claims affect sentiment on the Fed's monetary policy outlook.

 Investors are likely to focus on the Bank of Japan, but FOMC members will have to support the theory of monetary tightening towards the end of the cycle.  Meanwhile, USD/JPY recovered from a two-month low, cutting intraday losses around 137.250 early in the European session on Friday. 

Technical analysis and scenarios:

Indicators are currently giving bearish signals: the Bollinger Bands indicator is showing an upper band at 141.010, a middle band at 139.020 and a lower band at 137.040. Price is currently rising within the lower range of the indicator. In addition, the Bollinger Bands are narrowing and pointing downward, indicating a probable short-term decrease in price volatility and a possible trend change.

Main scenario (SELL)

Recommended entry level: 138.050.

Take Profit: 137.250.

Stop Loss: 138.500.

Alternative scenario (BUY)

Recommended entry level: 138.870.

Take Profit: 139.590.

Stop loss: 138.500.