Yen Faces Pressure Amid Political Uncertainty
On the other hand, the yen is weighed down by growing political uncertainty, which could complicate the Bank of Japan’s next steps in monetary policy. Over the weekend, Prime Minister Shigeru Ishiba’s Liberal Democratic Party lost its parliamentary majority, and many opposition politicians oppose the central bank’s current hawkish stance, arguing that Japan’s recovery remains fragile and susceptible to external trade tensions.
This narrative is echoed in today’s mixed PMI data: July’s manufacturing PMI dropped to 48.8 from 50.1 (the lowest in five months), while the services PMI improved from 51.7 to 53.5. Most analysts still anticipate at least one BoJ rate hike before year-end, though deeper industrial contraction could challenge this outlook.
Support and Resistance Levels
- Support: 145.00, 140.88
- Resistance: 147.60, 149.60, 151.65, 154.70
The pair is consolidating within a “symmetrical triangle” formation, approaching its lower boundary. A break below 145.00 (Fibonacci 23.6%) would pave the way for a decline toward 140.88 (Fibonacci 0.0%). Alternatively, a rebound from current levels could send USD/JPY back to resistance at 149.60 (Fibonacci 50.0%), 151.65 (Fibonacci 61.8%), and up to 154.70.
Technical Outlook: Indicators and Scenarios
Technical indicators continue to favor the upside. The Bollinger Bands are oriented higher, while the MACD histogram is decreasing but still positive. The Stochastic oscillator is near oversold territory, suggesting a possible bullish reversal.
Trading Scenarios & Forecast
- Bullish scenario: Consider long positions above 147.60, targeting 149.60, 151.65, and 154.70, with a stop-loss at 146.30. Implementation timeframe: 5–7 days.
- Bearish scenario: Consider short positions below 145.00, targeting 140.88, with a stop-loss at 147.00.
USD/JPY: consolidation in triangle, key technical levels