USD/JPY: dollar will continue to fall

Current trend

After the significant growth in the second half of September, in the beginning of October dollar was trading in the wide sideways consolidation channel against Japanese yen. Increased investors’ demand on the US currency and the verbal support of Fed significantly supported USD. Summer local highs were supposed to be tested.

However, after the publication of the poor nonfarm payrolls data in the USA the interest to dollar decreased, and the doubts of the Fed’s officials upon the interest rate rise in the end of the current year decreased the investment attractiveness of USD. On the other hand, the positive Machine Tool Orders, Machinery Orders and key indices data were published in Japan, which strengthened Japanese currency.

Today the traders are focused on FOMC Minutes publication, which can clear the perspectives of the US monetary policy in the middle term.

Support and resistance

At the moment there is no significant factor, which can support the US currency, so the pair will be in the downward correction, and the reversal is not excluded. Dollar is loosing its positions due to discrepancy of the US fundamental background and Fed’s actions. Due to the fall of the US currency in the middle term, the pair will go down to the level of 111.00. Technical indicators confirm the fall, MACD long positions volumes are falling, the pair reached the middle line of Bollinger Bands, after breakdown of which it will move to the lover border at the level of 111.00.

Resistance levels: 112.40, 112.60, 113.25, 113.45, 114.00, 114.35, 114.50.

Support levels: 112.00, 111.45, 111.00, 110.50, 110.20, 109.00, 108.15.

Trading tips

It’s better to increase the volume of short positions at the current level with the target at 111.00, stop loss is 112.60.