Trade review and trading tips for the Japanese yen

The price test at 154.28 occurred when the MACD indicator had moved far above the zero line, limiting the pair's upside potential. For this reason, I did not buy the dollar.

Yesterday's US producer-price report supported the dollar against the yen, as inflation accelerated to 5.4% year-on-year and rising oil prices strengthened expectations for a Federal Reserve rate hike in the near term. In normal circumstances, such a signal would be a direct reason for a strong rise in USD/JPY, since a higher US rate widens the yield gap with Japan and traditionally weighs on the yen. However, the situation is different now, and I would not be quick to write off the Japanese currency. The yen is still being supported by several powerful factors that run counter to a strong PPI. Ongoing interventions by the US and the Bank of Japan weaken the dollar across the board, investors are winding down carry trades, and the market is confidently expecting a BoJ rate normalization as soon as next week. In my view, this is why even a strong US inflation signal struggles to push the pair higher, and yesterday's dollar spike against the yen was much more modest than in pairs with other currencies.

I believe USD/JPY's further fate will be decided by the clash of two forces — hawkish Fed expectations driven by rising prices, and the combination of interventions with policy normalization in Japan. Before today's US consumer-price report, I lean toward the yen remaining resilient, but with an unexpectedly high CPI, the pair should prepare for a volatility spike that I will be watching closely.

As for the intraday strategy, I will rely mostly on scenarios No. 1 and No. 2.

Buy scenarios

Scenario No. 1: I plan to buy USD/JPY today if the price reaches the entry point around 154.35 (the green line on the chart), targeting a rise to 155.06 (the thicker green line on the chart). Around 155.06, I intend to exit long positions and open short positions in the opposite direction (expecting a 30–35 pip move from that level). It is best to return to buying the pair on corrections and meaningful pullbacks of USD/JPY. Important: before buying, make sure the MACD indicator is above the zero line and only beginning to rise from it.

Scenario No. 2: I also plan to buy USD/JPY today in case of two consecutive tests of 153.98 while the MACD is in oversold territory. This will limit the pair's downside potential and lead to an upward reversal. One can expect moves to the opposite levels 154.35 and 155.06.

Sell scenarios

Scenario No. 1: I plan to sell USD/JPY today only after a break of 153.98 (red line on the chart), which would lead to a quick decline in the pair. The sellers' key target will be 153.10, where I plan to exit shorts and immediately open longs in the opposite direction (expecting a 20–25 pip reversal from that level). Sellers can return at any moment; it only takes a hint from the central banks. Important: before selling, make sure the MACD indicator is below the zero line and only beginning to fall from it.

Scenario No. 2: I also plan to sell USD/JPY today in case of two consecutive tests of 154.35 while the MACD is in overbought territory. This will limit the pair's upside potential and trigger a downward reversal. Expect a decline to the opposite levels of 153.98 and 153.10.

What to Look for on the Chart:

• Thin Green Line – Entry price at which you can buy the trading instrument;
• Thick Green Line – Estimated price where you can set Take Profit or manually secure profits, as further growth above this level is unlikely;
• Thin Red Line – Entry price at which you can sell the trading instrument;
• Thick Red Line – Estimated price where you can set Take Profit or manually secure profits, as further decline below this level is unlikely;
• MACD Indicator. When entering the market, it's important to consider overbought and oversold zones.

Important: Beginner traders in the Forex market need to be very cautious when making entry decisions. It is best to stay out of the market ahead of significant fundamental reports to avoid being caught in sharp price fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without stop orders, you can quickly lose your entire deposit, especially if you do not employ money management practices and trade large volumes.

Also, remember that successful trading requires a clear trading plan, similar to the one provided above. Making spontaneous trading decisions based on current market conditions is inherently a losing strategy for intraday traders.