USDJPY makes another try to reach the level of 150

The USDJPY currency pair renewed its annual maximum last week, exceeding the landmark level of 150. The pair failed to break above this mark, but the corrective pullback was quite modest, as the bulls returned to purchases at 148.4. On Tuesday, a new wave of growth started, and we are likely to see another attempt of USDJPY to break above the 150 level.

The Bank of Japan's ultra-loose monetary policy prevents the yen from significantly strengthening against other key currencies. The Japanese regulator's board member, Asahi Noguchi, today reiterated the view of most of his colleagues to maintain a negative key rate until there is a noticeable boost to wage growth. Even a more conservative move to raise Japan's marginal government treasury yields is not expected until early spring 2024.

At the same time, the dollar exchange rate has stopped its fall despite the soft rhetoric of the Fed members. The U.S. currency is again in demand among buyers after yesterday's release of Producer Price Index (PPI) for September. The data was worse than expected, suggesting a long period of tight monetary policy in the U.S.

In the first month of autumn, producer prices rose by 0.5%, which was better than the figures for August (0.7%), but still did not meet the analysts' forecast (0.3%). The core PPI also rose more than expected (0.3% vs. 0.2%). Once again, the main reason for the price run-up was gasoline, which rose by 5.4%. Now, the attention of market participants shifts to today's Consumer Price Index (CPI) data. If these figures are also unexpectedly high, the dollar exchange rate may move to growth. This is especially true for the USDJPY pair due to the fundamental weakness of the yen.

Over the last week, the RSI indicator relieved from overbought condition and now does not prevent the upward movement of the USDJPY pair. The growth target will again be the 150-mark, which buyers can use for profit taking.

The following trading strategy may be offered:

Buy USDJPY at the current price. Take profit – 150. Stop loss – 148.4.

Also, traders can use a Trailing Stop instead of a fixed Stop loss at their discretion.