The USD/JPY pair is under pressure amid another fall of the Chinese stock market on Tuesday. At the same time, the Japanese Nikkei Stock Average ended the session with a 0.3% growth. It was supported by today’s decision by the Bank of Japan to continue with its QE program and keep interest rates unchanged.
Furthermore, the head of the BoJ Kuroda stated that the regulator is ready to further soften their policy if inflation drops. Should that happen, the Nikkei Stock Average would strengthen and the USD/JPY pair grow, regardless of the Fed interest rate decision on Thursday.
Today pay attention to the data on Retail Sales and Industrial Production for August from the US.
Support and resistance
As long as the pair remains below the level of 121.50 (50% Fibonacci, EMA200 on the 4-hour chart), short positions are preferable.
On the daily chart the price approached a strong support level at 119.50 (EMA200), the breakdown of which would allow the pair to fall to 118.40 (ЕМА50 on the weekly chart), 117.40 (beginning of 2015 lows).
A consolidation above the level of 120.85, however, would allow it to grow to 121.50, while the breakout of the level of 122.50 (38.2% Fibonacci) would resumes an upward trend towards year highs at 125.62.
OsMA and Stochastic give sell signals on the 4-hour chart and turn to sales on the daily chart.
Support levels: 118.40, 118.90, 119.50.
Resistance levels: 120.50, 120.85, 121.50, 122.00.
Open short positions from the levels of 119.75, 119.90 with targets at 119.50, 119.10, 118.50 and stop-loss at 120.10.
Pending buy orders can be placed at 120.20 with targets at 120.60, 120.80, 121.40, 121.90 and stop-loss at 119.90.