The test of the 158.92 price level in the first half of the day occurred when the MACD indicator was just beginning to move upward from the zero line, confirming a buy signal for the US dollar. As a result, the pair rose by 15 points.
The yen remains at a disadvantage as US inflation has once again exceeded expectations. As a reminder, the US headline CPI rose by 0.4% month-over-month in October, compared with the expected 0.3%, while core CPI increased by 0.3% against a forecast of 0.2%. Against this backdrop, the Federal Reserve is unlikely to adopt a more dovish tone. The Fed's interest rate of 3.75–4.00%, compared with the Bank of Japan's rate of 1.25%, creates a gap of approximately 2.5–2.75 percentage points. This gap is expected to widen further, directly supporting the US dollar against the yen. As a reminder, the Bank of Japan kept its interest rate unchanged at its October 30 meeting, with an 8–1 vote. More than 80% of economists expect a rate hike in December, but weak domestic demand continues to raise doubts about the pace of monetary policy normalization. With the yield differential widening and Japanese economic data remaining weak, USD/JPY retains the potential for further gains. Given that no US economic data is scheduled for release in the second half of today, there will be virtually no significant catalysts for a correction or selling in USD/JPY.
Regarding the intraday strategy, the focus will primarily be on the implementation of Scenarios #1 and #2.
Scenario #1: The plan is to buy USD/JPY today when the price reaches the entry level around 159.20 (the green line on the chart), with a target of 159.60 (the thicker green line on the chart). Around 159.60, the long position will be closed and a reverse sell position opened, targeting a move of 30–35 points in the opposite direction from that level. The pair is likely to rise today only if US economic data comes in stronger than expected. Important! Before buying, make sure that the MACD indicator is above the zero line and is just beginning to rise from that level.
Scenario #2: USD/JPY can also be bought today if the price tests the 158.92 level twice consecutively while the MACD indicator is in the oversold zone. This would limit the pair's downward potential and trigger an upward market reversal. The price could then rise toward the opposite levels of 159.20 and 159.60.
Sell SignalScenario #1: The plan is to sell USD/JPY today after the price breaks below 158.92 (the red line on the chart), which could trigger a rapid decline in the pair. The sellers' key target will be 158.61, where the short position will be closed and a reverse buy position opened immediately, targeting a move of 20–25 points in the opposite direction from that level. Selling pressure on the pair could return today if the Bank of Japan intervenes in the foreign exchange market. Important! Before selling, make sure that the MACD indicator is below the zero line and is just beginning to decline from that level.
Scenario #2: USD/JPY can also be sold today if the price tests the 159.20 level twice consecutively while the MACD indicator is in the overbought zone. This would limit the pair's upward potential and trigger a downward market reversal. The price could then decline toward the opposite levels of 158.92 and 158.61.
Important. Beginner Forex traders should exercise extreme caution when making entry decisions. It is best to stay out of the market ahead of major fundamental data releases 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 risk management principles are not followed and large position sizes are used.
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 fundamentally a losing strategy for an intraday trader.