USD/JPY: Triangle Pattern Developing, Downward Correction Underway
Current Trend
The USD/JPY pair is undergoing a corrective decline at 142.37. Supported by macroeconomic statistics, the yen is regaining strength.
In July, total wages increased by 3.6%, exceeding the forecast of 3.0%, but overtime pay decreased from 0.90% to -0.10%. The positive wage movement is one of the key conditions for the Bank of Japan to further tighten its monetary policy. Many experts expect at least one rate hike before the end of the year, although economic uncertainty remains. The household spending index changed from -0.1% to -1.7% month-on-month and from -1.4% to 0.1% year-on-year.
Meanwhile, the U.S. dollar remains in a downtrend near 100.80 on the USDX, continuing to weaken after the release of labor market data. The ADP Nonfarm Employment Change for August fell from the expected 144.0K to 99.0K, and Initial Jobless Claims decreased from 232.0K to 227.0K, while continuing claims fell from 1.860M to 1.838M.
Support and Resistance
On the daily chart, the correction is progressing near 143.50, where the beginning of a triangle pattern is observed.
Technical indicators continue to show sell signals. The fast EMA of the Alligator indicator remains below the signal line, and the AO histogram is forming downward bars in the sell zone.
- Resistance levels: 143.90, 146.90
- Support levels: 142.40, 140.15
Trading Tips
- Short positions: Open after the price consolidates below 142.40, with a target of 140.15. Stop loss at 143.20. Timeframe: 7 days or more.
- Long positions: Open after the price consolidates above 143.90, with a target of 146.90. Stop loss at 143.00.
