Trade analysis and tips for the Japanese yen

The test of 158.21 occurred as the MACD indicator began moving down from the zero line, confirming a good entry point to sell the dollar. As a result, the pair fell toward the target level 157.72.

The yen strengthened after Tokyo's October inflation data, and by Friday morning the currency traded around 157.70. Tokyo's consumer price index excluding fresh food rose 2.7% year-on-year versus 1.8% in August, according to the Ministry of Internal Affairs and Communications, while economists expected 2.3%. For the first time since January, the measure crossed 2%, driven by the fading of temporary government measures, including expanded childcare subsidies and a summer water discount.

Note the core inflation excluding energy: it accelerated to 3.0% from 2.0% a month earlier, even though the prime minister's energy subsidies shave nearly 0.4 percentage points off the headline rate.

In this situation, the Bank of Japan and yen savers benefit from accelerating prices. For the central bank, this confirms the case for normalization, while households lose as the cost of living rises faster than incomes. In my view, the data lock in a December rate hike as the base case, which limits further upside potential for USD/JPY.

For intraday strategy, I will mainly rely on the implementation of Scenario 1 and Scenario 2.

Buy Scenarios

Scenario 1: I plan to buy USD/JPY today if price reaches the entry area around 157.90 (green line on the chart) with a target of 158.37 (thicker green line). Around 158.37, I plan to exit long positions and open short positions in the opposite direction (expecting a 30–35 pip counter move). It is best to return to longs on corrections and significant pullbacks in USD/JPY. Important: before buying, ensure MACD is above zero and only beginning its rise.

Scenario 2: I also plan to buy USD/JPY if there are two consecutive tests of 157.60 while MACD is in the oversold area. This would limit the pair's downside potential and trigger an upward reversal. Expect moves toward 157.90 and 158.37.

Sell Scenarios

Scenario 1: I plan to sell USD/JPY only after the 157.60 level is breached (red line on the chart), which would lead to a rapid decline. The sellers' key target will be 157.00, where I plan to exit shorts and immediately open longs in the opposite direction (expecting a 20–25 pip counter move). 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: I also plan to sell if there are two consecutive tests of 157.90 while MACD is in the overbought area. This would cap upside and trigger a downward reversal. Expect declines to 157.60 and 157.00.

What's on the chart:

Thin green line – entry price at which you can buy the trading instrument.

Thick green line – approximate price where you can place Take Profit or manually lock in profits, since further upside above this level is unlikely.

Thin red line – entry price at which you can sell the trading instrument.

Thick red line – approximate price where you can place Take Profit or manually lock in profits, since further downside below this level is unlikely.

MACD indicator. When entering the market, it is important to follow the overbought and oversold zones.

Important. Beginner traders in the Forex market must be very cautious when making entry decisions. It is best to stay out of the market before the release of important 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 that successful trading requires a clear trading plan, like the example above. Spontaneous trading decisions based on the current market situation are inherently a losing strategy for an intraday trader.