Trade review and trading tips for the Japanese yen

The price test at 157.76 coincided with the MACD indicator moving far below the zero line, which limited the pair's downside potential. The second test of 157.76 occurred when the MACD was in the oversold area, triggering buy scenario No. 2 and driving the pair up by more than 40 pips.

Today, the yen fell to its weakest level against the dollar since July 2024. Yesterday's acceleration of the decline occurred amid speculation that Prime Minister Sanae Takaichi may soon announce early elections. Given the prime minister's high popularity, holding elections will likely strengthen her authority and give a second impulse to Takaichi's policy, which contributed to the weakening of the national currency when she took office last year. It is expected that, in the absence of intervention by the Bank of Japan, the yen's weakening will continue toward 160 per dollar. This will be driven directly by the persistent, significant yield gap between the US and Japan, negative real interest rates, and ongoing capital outflows.

As for the intraday strategy, I will mostly 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 159.14 (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 countermove from that level). It is best to resume 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 in case of two consecutive tests of 158.68 when the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to an upward reversal. One can expect a rise toward the opposing levels 159.14 and 159.80.

Sell scenarios

Scenario No. 1: I plan to sell USD/JPY today only after a break below 158.68 (red line on the chart), which will lead to a rapid decline in the pair. The key target for sellers will be 158.06, where I plan to exit shorts and immediately open longs in the opposite direction (expecting a 20–25-pip countermove from that level). It is better to sell at the highest possible price. 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 in case of two consecutive tests of 159.14 when the MACD indicator is in the overbought area. This will limit the pair's upside potential and lead to a reversal downward. One can expect a decline toward the opposing levels 158.68 and 158.06.

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.