Trade review and trading tips for the Japanese yen

The price test at 154.98 occurred as the MACD indicator began moving up from the zero line, confirming a correct entry point to buy the dollar. As a result, the pair rose by 20 pips.

The dollar's advance against the yen slowed yesterday after the US Empire State business-activity index fell to 7.6 in September, retreating from August's four-year high, but it remained in positive territory.

Additional mixed background for the yen today came from fresh Japanese data. Japan's August trade balance showed a deep deficit of £840.6 billion, which was better than the -£980.0 billion forecast but notably weaker than July's -£638.3 billion. A trade deficit typically signals that imports—primarily energy and raw materials—are rising faster than export revenue, pressuring the current account and weighing on the yen by reducing natural demand from exporters. Machinery and equipment orders for July also disappointed, unexpectedly plunging 3.7% versus an expected -2.8% and after a strong 11.2% gain the prior month. Such a sharp pullback hints at a pause in corporate investment activity and calls into question the sustainability of the recent capex recovery.

For USD/JPY, this combination of factors is broadly dollar-positive. A resilient, if slightly cooled, US industrial picture per the Empire State index strengthens the case for further Federal Reserve tightening. At the same time, a weak Japanese trade balance and the collapse in equipment orders paint a less confident picture of domestic demand and investment. With currency interventions having ceased and no new signals that Japanese authorities will step in, I believe this mix of firm US data and disappointing Japanese figures can continue to support the yield gap between the dollar and the yen and fuel carry-trade interest. The only factor that could alter this outlook is the upcoming Bank of Japan meeting — if the BOJ surprises with unexpectedly hawkish rhetoric despite clearly weakening domestic data, USD/JPY could face a sharper correction than currently priced in.

For intraday strategy, I will rely mainly on Scenarios No. 1 and No. 2.

Buy scenarios

Scenario No. 1: I plan to buy USD/JPY today if price reaches the entry area around 155.31 (green line on the chart), targeting a move to 155.96 (the thicker green line). Around 155.96, I intend to exit long positions and open short positions in the opposite direction (expecting a 30–35 pip swing from that level). It is best to return to buying the pair on corrections and meaningful pullbacks. Important: before buying, make sure the MACD is above zero and only beginning to rise.

Scenario No. 2: I also plan to buy USD/JPY today in case of two consecutive tests of 154.89 while the MACD is in oversold territory. That would limit downside potential and lead to an upward reversal. Expect moves to the opposite levels 155.31 and 155.96.

Sell scenarios

Scenario No. 1: I plan to sell USD/JPY today only after a break below 154.89 (red line on the chart), which would lead to a quick decline in the pair. The sellers' key target will be 154.29, where I plan to exit shorts and immediately open longs in the opposite direction (expecting a 20–25 pip reversal from that level). Sellers can return at any moment — it only takes a hint from the central banks. Important: before selling, make sure the MACD is below zero and only beginning to fall.

Scenario No. 2: I also plan to sell USD/JPY today in case of two consecutive tests of 155.31 while the MACD is in overbought territory. This would limit the pair's upside potential and trigger a downward reversal. Expect a decline to the opposite levels of 154.89 and 154.29.

What to Look for on the Chart:

• Thin Green Line – Entry price at which you can buy the trading instrument;
• Thick Green Line – Estimated price where you can set Take Profit or manually secure profits, as further growth above this level is unlikely;
• Thin Red Line – Entry price at which you can sell the trading instrument;
• Thick Red Line – Estimated price where you can set Take Profit or manually secure profits, as further decline below this level is unlikely;
• MACD Indicator. When entering the market, it's important to consider overbought and oversold zones.

Important: Beginner traders in the Forex market need to be very cautious when making entry decisions. It is best to stay out of the market ahead of significant fundamental reports to avoid being caught in sharp price fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without stop orders, you can quickly lose your entire deposit, especially if you do not employ money management practices and trade large volumes.

Also, remember that successful trading requires a clear trading plan, similar to the one provided above. Making spontaneous trading decisions based on current market conditions is inherently a losing strategy for intraday traders.