Analysis of Trades and Trading Tips for the Japanese Yen

The test of the 158.18 level during the first half of the day occurred when the MACD indicator had already declined significantly below the zero line, which limited the pair's downward potential.

The Japanese yen's evening trading session will be influenced primarily by the Federal Reserve. Earlier today, Japan released its Leading Economic Index for September. The indicator came in at 116.4, in line with expectations, but down from 118.0 in the previous month. The data contained no surprises. However, wages increased by 4.6% on Friday, compared with the forecast of 3.8%. This is currently supporting expectations of further interest rate increases by the Bank of Japan, whose policy rate currently stands at 1.25%.

It is worth noting that even on Friday, following the U.S. employment report, which showed an increase of 165,000 jobs compared with the forecast of 65,000, the dollar did not strengthen significantly against the yen. Today, however, speeches by Fed officials Austan Goolsbee and Thomas Barkin will provide an important test for the market. Barkin recently supported a gradual pace of interest rate increases, while Goolsbee previously identified inflation as the regulator's main concern. If their comments are hawkish, the dollar could receive additional support, putting the yen under renewed pressure.

As long as the interest rate differential between the Fed and the Bank of Japan remains at 3.75–4.00% versus 1.25%, expectations of another rate increase in Japan in December are likely to limit the yen's decline rather than trigger a sustained recovery.

Regarding the intraday trading strategy, the focus will be primarily on implementing Scenarios #1 and #2.

Buy Signal

Scenario #1: USD/JPY can be bought today if the price reaches the entry level around 158.09 (the thin green line on the chart), with an upward target at 158.32 (the thicker green line on the chart). Around 158.32, the long position is planned to be closed, followed by opening a short position, targeting a move of 30–35 points in the opposite direction from that level. The pair may rise today only if U.S. economic data comes in stronger than expected.

Important! Before buying, make sure that the MACD indicator is above the zero line and has only just begun to rise from it.

Scenario #2: USD/JPY can also be bought today if the price tests the 157.94 level twice consecutively while the MACD indicator is in the oversold zone. This would limit the pair's downward potential and trigger an upward market reversal. The pair could then rise toward the next upward targets of 158.09 and 158.32.

Sell Signal

Scenario #1: USD/JPY can be sold today after the price breaks below the 157.94 level (the red line on the chart), which could trigger a rapid decline in the pair. The sellers' main target will be 157.69, where the short position is planned to be closed, followed by immediately opening a long position, targeting a move of 20–25 points in the opposite direction from that level. Selling pressure on the pair could return today if the central bank intervenes in the currency market.

Important! Before selling, make sure that the MACD indicator is below the zero line and has only just begun to decline from it.

Scenario #2: USD/JPY can also be sold today if the price tests the 158.09 level twice consecutively while the MACD indicator is in the overbought zone. This would limit the pair's upward potential and trigger a downward market reversal. The pair could then decline toward the next downward targets of 157.94 and 157.69.

What the Chart Shows

• Thin green line – the entry price at which the trading instrument can be bought.
• Thick green line – the estimated price level at which Take Profit can be set or profits can be closed manually, as further gains above this level are considered unlikely.
• Thin red line – the entry price at which the trading instrument can be sold.
• Thick red line – the estimated price level at which Take Profit can be set or profits can be closed manually, as further declines below this level are considered unlikely.
• MACD indicator – when entering the market, it is important to consider overbought and oversold conditions.

Important

Beginner Forex traders should exercise considerable caution when making entry decisions. Before the release of major fundamental reports, it is generally preferable to stay out of the market to avoid exposure to sharp exchange rate fluctuations. If trading during news releases, always use stop-loss orders to minimize potential losses. Without stop-loss orders, the entire trading account can be lost very quickly, especially when position sizes are large and proper money management is not applied.

It is also important to remember that successful trading requires a clear trading plan, such as the one outlined above. Making spontaneous trading decisions based on current market conditions is an inherently unprofitable strategy for intraday traders.