Since the joint intervention by the Japanese and US authorities, the asset's volatility has decreased significantly, and price action now depends mainly on expectations regarding the future monetary policy of the Bank of Japan. Analysts assume that the interest rate could be raised once more before the end of the year, although no change is expected this month, as officials are likely to pause while assessing domestic conditions and the lower probability of further tightening by the US Federal Reserve. Speaking on Friday during the International Monetary Fund (IMF) meetings, Bank of Japan Governor Kazuo Ueda said that underlying inflation was approaching the 2.0% target and noted that the regulator was ready to adjust policy as needed. Supported by confidence in the Japanese policy outlook, demand for local equities has also improved, with net foreign investment in Japanese stocks rising from 2.199 trillion yen to 3.521 trillion yen last week. The importance of monetary policy expectations was also highlighted in our previous USD/JPY forecast.
The US dollar fell toward 101.40 in the USDX index under pressure from reduced expectations of further monetary tightening after Friday's comments by Federal Reserve Chair Kevin Warsh during the IMF meetings. The official refrained from giving direct guidance on the future path of interest rates, noting that appropriate measures would be taken if price pressures intensified again. In light of these remarks, market expectations for the Fed to keep borrowing costs unchanged at the October 28 meeting have strengthened further, according to the CME FedWatch Tool.
Support and resistance levels
On the daily chart, the trading instrument is correcting within an upward trend, trying to hold above the resistance line of the global descending channel with boundaries at 158.00–153.00.
Technical indicators are strengthening the global buy signal: the fast EMAs of the Alligator indicator remain above the slow ones, while the AO histogram is forming corrective bars in positive territory.
Support levels: 157.50, 155.70.
Resistance levels: 158.60, 160.20.
Trading Scenarios and USD/JPY Forecast
Long positions may be opened after the price rises and consolidates above 158.60, with the target at 160.20. Stop-loss — 157.80. Implementation period: 7 days or more.
Short positions may be opened after the price declines and consolidates below 157.50, with the target at 155.70. Stop-loss — 158.30.
Scenario
| Timeframe | Weekly |
| Recommendation | BUY STOP |
| Entry Point | 158.60 |
| Take Profit | 160.20 |
| Stop Loss | 157.80 |
| Key Levels | 155.70, 157.50, 158.60, 160.20 |
Alternative Scenario
| Recommendation | SELL STOP |
| Entry Point | 157.50 |
| Take Profit | 155.70 |
| Stop Loss | 158.30 |
| Key Levels | 155.70, 157.50, 158.60, 160.20 |
