During the Asian session, the USD/JPY pair is correcting around the level of 143.04, with the yen maintaining its upward momentum, continuing the local trend of recent days. Key factors driving this are macroeconomic data and the weakening US dollar.
As reported, the pace of real wages in Japan has slowed for the fourth consecutive month, reaching 2.2% in April. Meanwhile, overtime pay increased by 0.8%, up from a previous -0.4%. However, this is still far below the inflation target set by the Bank of Japan. The average wage was 302,453 yen, matching the revised March data. Japanese Minister for Economic Revitalization, Ryosuke Akazawa, noted that significant indexing is likely to support a moderate recovery in the national economy but did not exclude risks of a downturn due to the White House's trade policies. Meanwhile, Bank of Japan Governor Kazuo Ueda stated that the country’s economy can withstand the pressure of increased US tariffs. However, these risks could negatively impact national exports, slow corporate investments, and restrain wage growth. The tension in the labor market supports wage indexing and price growth, which, in the governor's view, allows the regulator to maintain its gradual tightening of monetary policy.
Market participants are also assessing foreign investment data, with a drop of 118.0 billion yen compared to the previous week’s correction of 100.4 billion yen. Investments in Japanese stocks amounted to 336.1 billion yen, up from 309.1 billion yen.
Regarding the US currency, the negative dynamics of the end of last week persist, and USDX quotes remain at 98.80, near yearly lows. Investors had a neutral reaction to the macroeconomic data released yesterday. The services sector PMI rose from 50.8 to 53.7 in May, while the ISM non-manufacturing PMI, based on the results of a survey of 375 companies from 17 non-manufacturing sectors, fell from 51.6 to 49.9. Additionally, the ADP employment report showed a drop in new job additions from 60,000 to 37,000 in May.
Support and Resistance Levels
On the daily chart, the price is correcting within the descending trend, attempting to reach the support line of the descending channel with boundaries at 146.00–136.50.
Technical indicators give a relatively fresh sell signal, which could significantly intensify in the near term. The fast EMAs on the Alligator indicator are below the signal line, and the AO histogram is forming new downward bars in the sell zone.
Support levels: 140.80, 136.70.
Resistance levels: 144.40, 148.50.
Trading Scenarios
If the downward movement continues and the price consolidates below 140.80, it is advisable to open sell positions with a target of 136.70. The stop-loss is set at 142.00. The expected timeframe for this move is 7 days or more.
If the resistance level is overcome and the price continues to rise, it is advisable to open buy positions above 144.40 with a target of 148.50. The stop-loss is set at 143.00.
Scenario
Timeframe: Weekly
Recommendation: SELL STOP
Entry point: 140.80
Take Profit: 136.70
Stop Loss: 142.00
Key Levels: 136.70, 140.80, 144.40, 148.50
Alternative Scenario
Recommendation: BUY STOP
Entry point: 144.40
Take Profit: 148.50
Stop Loss: 143.00
Key Levels: 136.70, 140.80, 144.40, 148.50