Fundamental analysis of USD/JPY

The USD/JPY pair rose and is trading at 145.500. The Yen pair's trajectory has been shaped by encouraging statistical data from Japan and the US Dollar's decline from recent highs, especially during sluggish trade in Asia. 
 
The economic situation in Japan is showing outstanding strength as evidenced by the Gross Domestic Product (GDP) data for the second quarter of 2023. GDP growth was 1.5% quarter-on-quarter, beating the previous forecast of 0.8%. At the same time, Japan's industrial production improved to 2.4% month-on-month in June, beating the forecast of 2.0% and previous data. In light of these developments, Japan's Economy Minister Shigeyuki Goto expressed hope for a moderate economic recovery. However, he also emphasized the need to be alert to the risks of a global recession and the impact of rising prices. Maintaining a balance between high economic growth and preventing the economy from overheating is becoming a top priority for central banks. However, in the current macroeconomic environment, inflation remains in focus, potentially reducing the immediate impact of these numbers on near-term monetary policy intentions and future actions. Notably, a recent statement from Japanese Finance Minister Shunichi Suzuki hinted at the possibility of deeper intervention from Tokyo, which put downward pressure on the USD/JPY pair. 
China's economic performance has a significant impact on the sentiment of risk takers, and countries related to China are likely to see similar macroeconomic trends. Note that China and the US are major importers of Japanese products. Market attention also extends to the US, where retail sales figures and the New York State manufacturing index will dominate. In contrast, the US Dollar Index (DXY) fell from a 5-week high, recording its first daily drop in four sessions at 103.10. The fall was fueled by weak inflation readings, with the New York Fed's expected annual inflation rate for July falling to 3.5%. That rate fell 3 points to its lowest level since April 2021. US 10-year Treasury yields hit their highest level since November 2022, prompting USD/JPY buyers to hold on to gains made in the previous session.  July retail sales are forecast to increase by 0.4%, beating June's +0.2%. A strong rise in retail sales is likely to force the US Federal Reserve to consider raising interest rates in an effort to rein in spending and reduce demand-driven consumer price inflation. Such an outcome would emphasize the growing divergence between the economic trajectory and policies of the Japanese and U.S. central banks. 
 
Over the next few sessions, market participants will closely monitor the US retail sales data for July, which is expected to play a key role in shaping the USD/JPY pair's midline ahead of the release of the minutes of the US Federal Reserve's latest monetary policy meeting on Wednesday. In addition, the interplay of bond market movements and the divergence between Bank of Japan (BoJ) and Fed policy will serve as important guideposts for the future direction of the move.
Technical Analysis and Scenarios:

The USD/JPY pair is currently trading at 145.460, showing a slight upward bias in the broader context of a wide price range. The Bollinger Bands indicator indicates that the upper band is located at 145.840, the middle band at 144.830 and the lower band at 143.830. This indicates that the price is in an uptrend, staying within the upper range of the indicator. Looking at the support and resistance levels, we see that the price is currently near the middle of this range. This indicates the presence of a consolidation phase with potential for both upward and downward movement.
Main scenario (BUY)
Recommended entry level: 146.000.
Take Profit: 146.500.
Stop Loss: 145.750.
Alternative scenario (SELL)
Recommended entry level: 145.090.
Take Profit: 144.620.
Stop loss: 145.250.