Trade Analysis and Tips for Trading the Japanese Yen

The test of the 157.88 level during the first half of the day occurred when the MACD indicator had just started moving higher from the zero line, confirming a buy signal for the dollar. However, the pair rose by only 12 points, and there has been no further movement so far.

Today's Japanese economic data brought no surprises for the yen. The October manufacturing PMI came in at 53.3, exactly matching both the previous month's reading and expectations. The indicator reflects purchasing managers' sentiment in the manufacturing sector, and its stability at this level points to steady business activity. Such figures rarely trigger a strong currency reaction. Therefore, Japanese domestic data remains a background factor today, while U.S. economic releases are likely to have the decisive influence. The U.S. data is expected to determine the direction of USD/JPY.

The October ISM Manufacturing PMI is forecast to reach 54.7, compared with 54.5 previously. Its impact on the pair comes through Treasury yields. The stronger the U.S. manufacturing sector and the higher the price pressures reflected in the survey, the greater the potential support for the dollar. The price component is forecast at 77.2, compared with the previous reading of 77.9. A weak ISM reading would support the opposite scenario and create room for the yen to strengthen.

An additional factor will be September U.S. construction spending, which is expected to rise by 0.3% following a 0.9% increase. This indicator is sensitive to mortgage rates, so a notable slowdown would be interpreted as a sign that interest-rate-sensitive sectors of the economy are cooling. This could reduce pressure on the Federal Reserve, although such an outcome is unlikely.

As for the intraday strategy, greater emphasis will be placed on the implementation of Scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: Today, USD/JPY can be bought when the entry price reaches the 158.07 level (the green line on the chart), with a target of 158.40 (the thicker green line on the chart). Around 158.40, the long position will be closed and a short position opened in the opposite direction, targeting a 30–35-point move from that level. The pair is likely to rise today only if U.S. economic data is strong. Important! Before buying, make sure that the MACD indicator is above the zero line and has only just started moving higher from it.

Scenario No. 2: USD/JPY can also be bought today if the price tests the 157.85 level twice consecutively while the MACD indicator is in the oversold area. This would limit the pair's downward potential and trigger an upward market reversal. A rise toward the opposite levels of 158.07 and 158.40 can be expected.

Sell Signal

Scenario No. 1: Today, USD/JPY can be sold after the price breaks below the 157.85 level (the red line on the chart), which could lead to a rapid decline in the pair. The sellers' key target will be 157.49, where the short position will be closed and a long position opened immediately in the opposite direction, targeting a 20–25-point move from that level. Selling pressure on the pair is likely to return today if the central bank intervenes. Important! Before selling, make sure that the MACD indicator is below the zero line and has only just started moving lower from it.

Scenario No. 2: USD/JPY can also be sold today if the price tests the 158.07 level twice consecutively while the MACD indicator is in the overbought area. This would limit the pair's upward potential and trigger a downward market reversal. A decline toward the opposite levels of 157.85 and 157.49 can be expected.

What the Chart Shows

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

Important. Beginner Forex traders should make market-entry decisions with great caution. Before the release of important fundamental reports, it is generally best to stay out of the market to avoid exposure to sharp exchange-rate fluctuations. If trading during news releases, always place stop-loss orders to minimize potential losses. Without stop-loss orders, the entire trading account can be depleted very quickly, especially when large position sizes are used without proper money management.

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