General analysis USDJPY for 28.03.2022
Current dynamics
The Japanese yen continues to depreciate against the US currency. Today the pair USD/JPY updated six-year highs and is currently testing the resistance level of 124.00.
The National Bank of Japan seems to be taking it easy regarding the sharp decline in the yen. The regulator continues to intervene extensively to keep bond yields close to the target level. It seems that the Japanese central bank does not want to fight inflation and is preparing to devalue the yen, which is a very controversial measure. The BoJ has maintained a soft monetary policy despite the fact that the overwhelming majority of central banks are moving towards a tightening of monetary policy. The gap between the BoJ and the Fed will widen even further in May as the US regulator is set to raise its key rate by 50 basis points in May.
The escalation of the geopolitical conflict between Japan and Russia is also worth considering. The role of villain for the Russian Federation is not new, but the risks to the Japanese industrial sector and the economy as a whole are very significant. It is also worth bearing in mind that neither the Eurozone nor Japan has been successful in finding alternatives for Russian energy sources.
Tomorrow at 01:30 (GMT+2), Japan is expected to release statistics on the labour market in Japan. At 01:50 (GMT+2), the Bank of Japan will release a report on inflation and economic growth. The report will have a strong impact on the pair's dynamics. Also on Tuesday at 16:00 (GMT+2), US consumer confidence and labor market data will be released.
Support and resistance levels
On the 4h chart the instrument is consolidating near the upper boundary of the Bollinger Band indicator, which is the nearest resistance level. The indicator is directed upwards and the price range is widening, indicating that the uptrend continues. The MACD histogram is in the positive zone, holding a strong buy signal. Stochastic has left the overbought area, forming a sell signal.
- Support levels: 119.00, 120.25, 121.35, 122,15, 123.20.
- Resistance levels: 124.05, 124.75, 125.40.
Trading scenarios
- Long positions can be opened at the current price with a target of 125.10 and a stop loss at 122.65. Implementation period: 1-2 days.
- Short positions should be opened below the level of 122.65 with a target of 121.60 and a stop-loss at 123.05. Implementation period: 1-2 days.