USDJPY faces strong resistance

In April, Japan's exports reached their lowest level in more than two years. This was due to a sharp drop in shipments to China and lingering concerns about unstable global economic demand. Treasury Department data released Thursday showed that exports rose by 2.6% compared to the previous year. However, this growth was less than the expected figure of 3.0% and slower than the March growth of 4.3%.

The market had little reaction to these figures, and USDJPY grew by 30 standard points since the American dollar dominates in this currency pair.

The United States economy is close to recession. By September, the Federal Reserve may have no choice but to start cutting interest rates, according to analysts from JPMorgan.

The mismatch between the markets' expectations of a rate cut and the contrary comments from Fed officials leaves many investors confused. However, inflation is too high, and it will take a recession to ease it, said Seamus Mac Gorain, a portfolio manager at JPMorgan. Shocks to U.S. banking make a recession increase the risk of recession. The U.S. regulator may see the need to ease monetary policy as soon as September.

However, as a recent Reuters poll showed, rates in the U.S. are expected to remain unchanged until the end of this year, despite the threat of recession. 

As for the controversial situation with the U.S. debt ceiling, Mac Gorain expects a surge of market volatility in the coming weeks before the issue is resolved.

Expectations of a probable recession in the U.S. and the need for the Fed to cut interest rates could hurt the USDJPY pair in the near term. Amid instability and declining economic growth, investors tend to prefer risk-free assets like the Japanese yen.

The USDJPY is approaching the strong resistance of 137.77, which has proved its importance repeatedly. In addition, the pair's quotations also encountered a trend resistance, from which the price has pulled back several times.

Signal USDJPY:

Short-term prospects are selling.

Target is at the level of 135.80.

Part of the profit should be fixed around the level of 136.85.

Stop-loss is around the level of 138.60.

The bearish trend is short-term, so choose a trading volume of no more than 2% of your balance.