General analysis USDJPY for 01.07.2022

Current Dynamics

Production in Japan decreased on 7.2%. In the U.S., the largest aluminum producer temporarily shut down its plant. Japanese officials urged to save electricity. The GDPNow real GDP growth forecast for the second quarter of 2022 in the US is -1.0%.
Due to the lockdown in China and a shortage of chips, Japan's output decreased on 7.2% compared to the previous month. The seasonally adjusted production index at mines and factories was 88.3, automobile production decreased on an 8% from April, and electrical component production decreased 11.3%.
Meanwhile, in the U.S., the largest aluminum producer temporarily shut down its plant. According to the report, the plant's downtime could last for up to a year if electricity prices do not fall to an acceptable level. It is worth noting that at the plant worked 600 employees, most of whom will be laid off.
Meanwhile, in Japan for the first time in seven years, the authorities have called to save electricity. This step implies using air conditioners and other appliances, helping to avoid heat stroke, but residents of Japan are strongly advised not to use other electrical appliances without a special need. Against this background, the situation around the Sakhalin-2 project looks a little different. By order of the President of Russia the property of Sakhalin Energy (the operator of the Sakhalin-2 project) will become the property of Russia and will be given for free use to a new operator. It should be reminded that the share of Japanese companies in the project is 22.5% and the project itself provides 4% of the world market of liquefied natural gas. Japanese Prime Minister Fumio Kishida said that the order of the President of Russia does not mean an immediate end of supplies of liquefied natural gas, but Japan will look attentively at what requirements a contract will contain in the aftermath of this decision.
Meanwhile, the Federal Reserve Bank (FRB) of Atlanta's GDPNow forecast for the second quarter of 2022 was -1%. It is worth noting that negative GDP growth (i.e. a decrease) means the official start of the recession in the USA.
The Japanese government is still trying to make its industry attractive. China with its lockdowns and energy growth is having a strong pressure on it, but the depreciation of the yen is still making goods more attractive. It seems Japan is creating the conditions under which its products will be more attractive and industry will work during the global crisis. It is worth noting that the official sources in the U.S. are already beginning to signal that the crisis will soon begin.

Support and resistance levels.

USD/JPY tested the 0.0 Fibonacci level, but failed to break it and fell below the key 23.6 Fibonacci level. The RSI oscillator crossed above the 50 level and continued to decline.

• Support levels: 134.70,134.10, 133.50, 132.73, 131.50
• Resistance levels: 136.70, 135.45 

Trading scenarios

• Short positions can be opened below the level of 134.70 with target 133.50 and stop loss 135.45 : Implementation period: 1-3 days
• Long positions can be opened above the level of 135.45 with target 136.70 and stop-loss 134.10: Implementation period: 1-3 days