In this review, one should pay attention to the medium-term prospects of the USDJPY currency pair.
Since mid-September, the pair made a corrective upward move by almost 80% blocking the rally, which took place from July to September. It is quite possible that the pair will go up to the level of 160.0, where a local low remains untested.
Below the current price level, the technical level of 150.0 is clearly visible. A local maximum was formed at this level on August 14–15, which serves as a target.
From a fundamental perspective, in the medium-term between 2 and 10 months, the US dollar will weaken, and the Japanese yen will strengthen.
Today, there is a strong difference between the Fed and the Bank of Japan interest rates. The US rate is 4.75%, while the Bank of Japan rate is 0.25%. At the same time, the inflation rate in these countries is about the same: in the US it is 2.6% and in Japan it is 2.5%. In other words, from the point of view of regulating the inflation rate, the rates should also aim for approximately the same value. The unemployment rate in Japan is 2.4%, while in the US it is 4.1%. That is, the labor market in Japan is tighter compared to the US, which also provides another reason for the Bank of Japan to tighten its monetary policy.
Earlier, the governor of the Bank of Japan, albeit choosing cautious phrases, but still repeatedly stated about the trajectory of further increase in interest rate. In other words, from the regulators' point of view, there is a group of factors that will contribute to the weakening of USDJPY in the future.
The overall recommendation is to sell USDJPY.
Profits should be taken at the level of 150.00. A Stop loss could be set at the level of 161.00.
The volume of the opened position should be set in such a way that the value of the possible loss, fixed with the help of a protective Stop loss order, is no more than 1% of your deposit funds.
This content is for informational purposes only and is not intended to be investing advice.
