Trade review and trading tips for the Japanese yen

The price test at 158.75 coincided with the MACD indicator just beginning to move down from the zero line, providing an entry point to sell the dollar. However, the trade recorded losses because the pair did not decline.

December's US inflation rise of 0.3% exceeded analysts' expectations, strengthening the dollar and further weakening the Japanese yen along the trend. Investors, whose expectations had leaned toward more moderate price growth, began to revise their forecasts for future Federal Reserve policy. Confidence that the Fed will refrain from cutting interest rates in the near term strengthened, which supported the US currency. The Japanese yen, by contrast, came under pressure. Japan's weak recent economic data, together with a global tilt toward risk assets, have reduced the yen's safe-haven status. The interest rate differential between the US and Japan only reinforces this downward trend. Today's figures showing a contraction in Japan's money supply aggregate and a drop in machinery orders further increased pressure on the yen.

Regarding the intraday strategy, I will mainly rely on implementing scenarios No. 1 and No. 2.

Buy scenarios

Scenario No. 1: I plan to buy USD/JPY today at an entry point around 159.37 (green line on the chart), targeting a rise to 159.80 (thicker green line on the chart). Around 159.80, I intend to exit longs and open shorts in the opposite direction (expecting a 30–35 pip counter-move from that level). It is best to return to buying the pair on corrections and significant pullbacks in 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 if the MACD indicator is oversold and the price tests 159.07 twice. This will limit the pair's downside potential and lead to an upward reversal. One can expect a rise toward the opposing levels 159.37 and 159.80.

Sell scenarios

Scenario No. 1: I plan to sell USD/JPY today only after a break below 159.07 (red line on the chart), which will trigger a rapid decline in the pair. The key target for sellers will be 158.66, where I plan to exit shorts and immediately open longs in the opposite direction (expecting a 20–25 pip counter?move from that level). It is better to sell as high as possible. Important! Before selling, make sure the MACD indicator is below the zero line and only beginning to decline from it.

Scenario No. 2: I also plan to sell USD/JPY today if the MACD indicator is in the overbought area and the pair tests 159.37 twice. This will limit the pair's upside potential and lead to a reversal downward. One can expect a decline toward the opposing levels 159.07 and 158.66.

What is on the chart

• Thin green line — entry price at which you can buy the instrument
• Thick green line — suggested Take Profit price or level at which to manually lock in profit, since further rise above this level is unlikely.
• Thin red line — entry price at which you can sell the instrument
• Thick red line — suggested Take Profit price or level at which to manually lock in profit, since further decline below this level is unlikely.
• MACD indicator — when entering the market, it is important to follow the overbought and oversold zones
• Important notes: Beginner forex traders must be very cautious when deciding to enter the market. It is best to be out of the market before major fundamental reports are released to avoid being 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 lose your entire deposit quickly, especially if you do not use money management and trade large volumes.
• Remember that successful trading requires a clear trading plan like the one presented above. Spontaneous trading decisions based on current market noise are a losing strategy for the intraday trader.