Traders are correcting their Dollar positions before today’s key release of the FOMC Minutes at 9 pm (GMT +3), as the Fed may express some doubts of the necessity of the interest rates hike in the US in September.
Nikkei Stock Average fell by 1.6%. The Japanese trade balance for July shrank to minus 268.1 billion Yen. Tomorrow the Bank of Japan is going to publish their decision on the interest rate change. However, as markets are expecting the Japanese GDP to fall by 2% in the second quarter, the interest rate is likely to remain at the current zero mark.
Thus, in the medium-term the USD/JPY pair continues growing and any local fall in the pair should be considered as an opportunity to open long positions.
Support and resistance
OsMA and Stochastic on the 4-hour and daily charts give sell signals. However, medium-term short positions can only be considered after the breakdown of the level of 123.15 and consolidation below 122.35. A fall below 120.70, 120.00 is unlikely.
Support levels: 124.10 (23.6% Fibonacci and ЕМА144), 123.90 (ЕМА200 on the 4-hour chart), 123.50, 123.15 (38.2% Fibonacci).
Resistance levels: 124.50 (psychologically important level), 124.80, 125.20 (local highs).
Open long positions from the levels of 124.10, 123.80, 123.50 with targets at 124.50, 125.00, 125.65 and stop-loss at 123.00.
Short positions can be opened after the breakdown and consolidation below 123.15 with targets at 122.35, 121.60.