USDJPY quotes are consolidating near this year’s highs as traders are hesitant to make big bets ahead of a batch of economic data releases this week.
The main focus will be on the Personal Consumption Expenditures (PCE) price index and the U.S. Nonfarm Payrolls. These indices may determine the Federal Reserve's outlook for interest rates.
Meanwhile, traders are closely watching any signs of a possible intervention from the Japanese government as the yen remains near a 9-month low against the dollar.
Last September, Japan conducted foreign exchange market intervention when the dollar rose above 145 yen. This triggered the Ministry of Finance (MOF) to start buying yen and brought USDJPY back to the 140 level. Over the past year, the yen has dropped by 11% against the dollar.
Low yields in Japan have made the national currency an easy target for short selling and deal funding, while the increasing interest rate gap between Japan and the United States has led to continued yen weakness.
According to Saxo Bank market strategist Charu Chanana, the lack of comments from Bank of Japan Governor Kazuo Ueda on the national currency at the Jackson Hole conference suggests that the regulator is not rushing to intervene again. The level of 150 yen per dollar remains a potential point of intervention in the pricing, Ueda added.
The USDJPY currency pair is in the formation of the ascending correction channel on the D1 timeframe.
In terms of wave analysis, the price is forming the first ascending wave in the new series of waves after the extremum points were updated on the H1 timeframe.
The strong news background of the current week may provide conditions for the formation of the second descending wave. However, there are no technical signals for a reversal so far, and the upside potential is increasing in terms of fundamentals.
The short-term outlook for the USDJPY pair suggests buying.
The target is at the level of 148.80.
Part of the profit should be taken near 147.00.
The Stop-loss is set at 145.20.
Bullish trend has a short-term character, so the trade volume should not be more than 2% of your balance.