General analysis USDJPY for 10.06.2022

Current Dynamics.

For the second month in a row, spending by Japanese households has decreased. The Japanese government has approved a plan to build a "new capitalism. The Bank of Japan registered a 9.1% year-over-year increase in wholesale purchase prices. In the U.S., "shrinkflation" was registered.
According to the Ministry of Internal Affairs and Communications of Japan, for the second month in a row, the household spending decreased. Thus, households with about 1.7% less spending than in April 2021. Data includes decreases such as an 8.1% decrease in transportation and communication expenses, a 2.1% decrease in food expenses and an 8.7% decrease in clothing expenses.
Meanwhile, the Japanese government has approved a plan to build a "new capitalism". According to the plan, the government intends to make targeted investments in science, technology and innovative research. Also, the government wants to increase wages. It is also planned to introduce refresher courses for about 1 million workers.
At the same time, the Bank of Japan registered a year-on-year increase in wholesale purchase prices by 9.1% in May. According to the published statistics, compared to May 2021 imported goods prices increased by 43.3%, the cost of export goods increased by 16.7%. According to experts, such changes were caused by growth in prices for grain and energy resources.
On the background of this, the ruling Liberal Democratic Party (LDP) of Japan plans to significantly increase the share of nuclear power in the country's energy mix. The LDP plans to make significant efforts to restart nuclear power plants that were shut down after the accident at the Fukushima 1 nuclear power plant.
Meanwhile, Bank of Japan Governor Haruhiko Kuroda said that despite consumer inflation at 2.1% in April the Bank of Japan's target of 2% had not been reached. Kuroda stressed that the central bank will not deviate from its soft monetary course.
Meanwhile, in the U.S., "shrinkflation" has been registered - manufacturers are quietly reducing package sizes without lowering prices. However, it is worth looking at companies' operating profits, for instance, PepsiCo's operating profit is up 11% in 2021 and 128% in the first quarter of 2022.
The Bank of Japan makes it clear it has no intention to change its monetary policy at this time. In the U.S., on the other hand, it is getting hidden inflation in addition to core inflation, which may aggravate the situation and force the U.S. Federal Reserve to raise its key rate more aggressively. The next Fed Interest Rate Decision is due on Wednesday.

Support and resistance levels.

The USD/JPY has moved to consolidate in a wide range above the key 76.4 Fibonacci level after a strong upward move. The current trend is upward. There was a divergence on the RSI oscillator and the RSI crossed the 70 level from top to bottom.

• Support levels: 133.50, 132.92, 132.45,131.96,131.39,130.41
• Resistance levels: 134.50,135.80

Trading scenarios

• Long positions can be opened above the level of 134.50 with target of 135.80 and stop-loss at 133.50: Implementation period: 2-4 days
• Short positions can be opened below the level of 133.50 with a target of 132.45 and stop-loss of 133.90: Implementation period: 2-4 days