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The test of 158.16 occurred as the MACD indicator began moving down from the zero line, confirming a valid entry point to sell the dollar. As a result, the pair fell toward the target area at 157.83.
The yen appreciated against the dollar, driven not by Japanese news but by weakness in the US currency. Dollar demand fell sharply after Trump said the US would not attack Iran before the midterms, and risk assets rallied. Additional pressure came from a sharp drop in US Treasury yields, which were around 5.31% — near a multi-decade high — just yesterday. Yields remain the main reference for USD/JPY, so their pullback allowed the pair to decline and the yen to reclaim part of its losses.
Prime Minister Sanae Takaichi's comments also provided support. She said strengthening the economy's global competitiveness will ultimately raise confidence in the yen, thereby defending her fiscal policy. This continues the line the government has previously signaled. Yesterday, Takaichi said Japan no longer needs reflationary policy because the economy is not in deflation and core inflation has been above the Bank of Japan's 2% target for four consecutive years. The market interpreted that move away from reflation as a signal in favor of further policy normalization.
There is a flip side. The Japanese parliament is about to discuss a temporary cut in the consumption tax on food and non-alcoholic drinks, but the financing of that measure remains unresolved—which could weigh on the yen. Even yesterday's 30-year JGB auction, with a yield of 4.11% and a bids-to-cover ratio of 3.88, showed investors are willing to buy only at high yields. Yen weakness is increasingly a political problem because it pushes up import prices and raises the cost of living for households; expensive oil amid tensions around Hormuz only exacerbates that effect.
For intraday strategy, I will mainly rely on Scenario 1 and Scenario 2.
Scenario 1: Buy USD/JPY today if price reaches the entry area around 158.13 (green line), targeting 158.44 (thicker green line). Around 158.44, plan to exit long positions and consider opening short positions for a pullback (expecting 30–35 pips). Prefer returning to longs on corrections and significant pullbacks. Important: before buying, ensure MACD is above zero and only beginning to rise.
Scenario 2: Also buy if 158.01 is tested twice in a row while MACD is in the oversold area. This would limit downside potential and trigger an upward reversal. Expect moves toward 158.13 and 158.44.
Scenario 1: Sell USD/JPY only after the 158.01 level (red line) is breached; this should lead to a rapid decline. Sellers' key target is 157.79, where I plan to exit shorts and immediately open longs for a counter-move (expecting 20–25 pips). Sellers can return at any moment — any hint from the central bank is enough. Important: before selling, ensure MACD is below zero and only beginning its decline.
Scenario 2: Also sell if 158.13 is tested twice in a row while MACD is in the overbought area. This would cap upside and trigger a downward reversal. Expect declines to 158.01 and 157.79.
Thin green line — entry price where you can buy the instrument.
Thick green line — approximate price where you can place Take Profit or manually lock in profits, because further upside above this level is unlikely.
Thin red line — entry price where you can sell the instrument.
Thick red line — approximate price where you can place Take Profit or manually lock in profits, because further downside below this level is unlikely.
MACD indicator. When entering the market, it's important to consider overbought and oversold zones.
Important. Novice Forex traders must be very cautious when deciding to enter the market. It is best to stay out before major fundamental reports to avoid getting caught in sharp price swings. If you decide to trade during news releases, always place stop orders to minimize losses. Without stop orders, you can quickly lose your entire deposit, especially if you don't use money management and trade large volumes.
Remember: successful trading requires a clear trading plan, like the example above. Spontaneous trade decisions based solely on the immediate market situation are, by definition, a losing strategy for an intraday trader.
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