2016-08-23 13:46:43

Overview and dynamics
Since the beginning of this week, and today's trading day the US dollar has been mainly weakening on the currency market.

After at the last meeting in late July, the Bank of Japan decided to leave its monetary policy unchanged, USD/JPY pair dropped sharply to the support level 100.60. Despite the following correction, USD/JPY pair remains under pressure. The decline occurs in the descending channel on the weekly chart with a lower limit near the level 95.00.

Our opinion
Fundamental background creates the preconditions for the further decrease of USD/JPY pair, and a breakdown of the level 100.00, in the opinion of many market participants, is just a matter of time. Despite the verbal intervention of representatives of monetary authorities of Japan and the United States, USD/JPY pair continues to decline.

Most likely, until the Federal Reserve and the Bank of Japan meeting (20-21 September), USD/JPY pair will remain under pressure. In case in September no steps are taken by the Fed and the Bank of Japan, a further decline of USD/JPY pair is guaranteed.

OsMA and Stochastic indicators on higher timeframes (daily, weekly, monthly) are on the side of the sellers. In case of further decrease, the support levels will be 99.00, 97.50, 95.00. The reverse scenario suggests an upward correction to the resistance levels 100.60, 101.70, 102.40 (EMA200 on the 4-hour chart), 103.00 (EMA50 daily chart).

However, a deeper correction without the support of the Bank of Japan and the Federal Reserve to the resistance levels 106.50 (Fibonacci correction level 23.6% to the decline of the pair since June 2015 from the level 125.65) and 107.35 (EMA200 on the weekly chart) is unlikely.

Only a rise above the level 110.10 (EMA200 on the daily chart, Fibonacci level 38.2%) will cancel the steady downtrend of USD/JPY pair and can create conditions for the further growth of USD/JPY pair to the levels 111.25 (EMA200 on the daily chart), 113.00 ( Fibonacci level 50.0%).

Support levels: 100.00, 99.00, 97.50, 95.00
Resistance Levels: 100.60, 101.70, 102.40, 103.00, 103.50, 104.00, 150.00, 106.50, 107.35, 107.90, 110.10

Trading recommendations

Buy Stop 101.10. Stop Loss 100.60. Take-Profit 101.70, 102.40, 103.00, 103.50, 104.00, 150.00, 106.50
Sell according to the market. Stop Loss 101.10. Take-Profit 100.00, 99.00, 97.50, 95.00

In the downward channel
In the downward channel

Below the nearest resistance level 100.60
Below the nearest resistance level 100.60