Last Friday’s data from the University of Michigan showed 1-year inflation expectations easing from 4.9% to 4.8%, while the 5-year outlook dropped from 3.9% to 3.5%. Meanwhile, the consumer expectations index declined from 57.2 to 55.9 points in August, and the consumer sentiment index edged down from 58.6 to 58.2 points.
The yen, in turn, finds support from the Bank of Japan’s plans to gradually tighten monetary policy despite uneven inflation dynamics. Forecasts suggest that by year-end the central bank could raise its key rate by at least 25 basis points, to 0.75%. However, at the September meeting, more than 90% of analysts expect no change.
Also on Friday, Tokyo CPI slowed from 2.9% to 2.6%, while the core index eased from 3.1% to 3.0%. Still, concerns persist over Japan’s industrial production, which contracted 1.6% in July after a 2.1% rise the previous month (forecast: –1.0%), and dropped 0.9% y/y after growing 4.4% earlier.
Support and Resistance Levels
On the daily chart, Bollinger Bands show a gradual downward slope, with the price range nearly unchanged, limiting development of the bearish trend in the short term. MACD is moving lower, maintaining a weak sell signal (the histogram remains below the signal line) and pushing toward the zero level. Stochastic shows stronger downside momentum but is hovering near the “20” mark, indicating oversold risks for the dollar in the very short term.
- Resistance levels: 147.40, 148.00, 148.77, 149.50
- Support levels: 146.56, 146.00, 145.00, 144.00
Trading Scenarios
Short positions may be opened after a confident break below 146.56, targeting 145.00, with a stop-loss at 147.40. Implementation timeframe: 1–2 days.
Long positions could be considered if the price breaks above 147.40, aiming for 149.50, with a stop-loss at 146.56.
Scenario
- Timeframe: Intraday
- Recommendation: SELL STOP
- Entry point: 146.55
- Take Profit: 145.00
- Stop Loss: 147.40
- Key Levels: 144.00, 145.00, 146.00, 146.56, 147.40, 148.00, 148.77, 149.50
Alternative Scenario
- Recommendation: BUY STOP
- Entry point: 147.45
- Take Profit: 149.50
- Stop Loss: 146.56
- Key Levels: 144.00, 145.00, 146.00, 146.56, 147.40, 148.00, 148.77, 149.50