Overview and dynamics
Amid the comments of Janet Yellen and other Fed officials with respect to monetary policy prospects in the United States given on Friday, the dollar strengthened sharply on the currency market.
USD/JPY pair rose on Friday by 130 points, rebounding from the support level near the level 100.00 and almost completely compensating the decline in the last three weeks. With the opening of the trading day on Monday, the pair continued to rise and almost reached the level 102.40.
Nevertheless, the pair remains within the descending channel on the weekly chart with a lower limit passing near the level 95.00, below the key resistance level 104.20 (EMA200 on the monthly chart).
In the previous review, we wrote on August 26 that "OsMA and Stochastic indicators on the daily chart ... went over to the buyers, signaling a possible upward correction. The trigger for this correction can be Yellen’s speech if it contains any hints at the increase in US interest rates in the nearest time. Then the pair might increase to the resistance levels 101.50, 102.00, 130.00. "
The forecast realized almost completely except for the level 103.00 (EMA50 on the daily chart), which has not been taken yet. It is likely that correction growth of USD/JPY pair may continue until Friday, when at 15:30 (GMT + 3) data on the labor market in the US in August will be published. However, if labor market data in the US is weak, the dollar will fall on the currency market, including against the yen.
If USD/JPY pair is not supported by the Fed’s and the Bank of Japan's decisions at the next meetings September 20-21, then, according to many market participants, a breakthrough of the level 100.00 is a matter of time.
A deeper correction towards the resistance levels 106.50 (Fibonacci level 23.6% of correction to the decline of the pair since June 2015 from the level 125.65), 107.35 (EMA200 on the weekly chart, EMA144 on the daily chart) may not take place in this case.
Only growth above the level 110.10 (Fibonacci level 38.2%) can create conditions for the further growth of USD/JPY pair to the level 113.00 (Fibonacci level 50.0%) and further.
In the case of breaking the support level 100.00 and further decrease of the pair, the targets will be the levels 99.00, 97.50, 95.00.
Support levels: 102.00, 101.50, 100.60, 100.00, 99.00, 97.50, 95.00
Resistance Levels: 103.00, 103.50, 104.00, 104.20, 150.00, 106.50, 107.35
Buy Stop 102.40. Stop Loss 101.90. Take-Profit 103.00, 103.50, 104.00, 104.20, 105.00, 106.50
Sell Stop 101.70. Stop Loss 102.20. Take-Profit 101.50, 100.60, 100.00, 99.00, 97.50, 95.00
The indicators went over to the buyers
In the downward channel