Trade review and tips for trading the Japanese yen

A price test at 157.90 occurred as the MACD indicator began moving up from the zero line, confirming a good entry point to buy the dollar. As a result, the pair rose toward the target area 158.13.

The yen is holding up weaker against the dollar than it may seem. The dollar found support after yesterday's US data, enough to push it higher against the yen. US PPI for September rose 1.3% month-on-month versus 0.5% expected. Retail sales rose 0.8% versus 0.3% expected, and the Empire Manufacturing index jumped to 25.5 versus 10.3 expected (7.6 previously). For USD/JPY, what matters is not the print itself but the impact on US Treasury yields and Federal Reserve-rate expectations — a December hike is already priced in.

Support for the yen comes from Bank of Japan board member Junko Koeda. She warned against excessive caution on rate hikes and said the neutral rate is noticeably above 1%, so the bank has room to raise from the current 1.25%. This aligns with Kazuo Ueda's October 6 remarks about continuing hikes; the market prices in roughly a 25% chance of a BOJ move on October 30.

In my view, as long as US data do not trigger a new dollar rally and the BOJ remains hawkish, the yen should hold its positions. A sharp rise in US yields remains the main risk, but yesterday's prints did not produce that.

For intraday strategy, I will mainly rely on Scenarios 1 and 2.

Scenarios to buy

Scenario 1: Buy USD/JPY today near 157.97 (green line on the chart), targeting 158.33 (thicker green line). I will exit long positions at 158.33 and open short positions there, aiming for a 30–35 pip retracement. It is best to return to buying the pair on corrections and sizable pullbacks. Important: before buying, ensure MACD is above zero and just beginning to rise.

Scenario 2: Also consider buying if price tests 157.81 twice while MACD is in the oversold area. That would limit downside potential and trigger a reversal higher. Expect moves to 157.97 and 158.33.

Scenarios to sell

Scenario 1: Plan to sell USD/JPY only after a break below 157.81 (red line on the chart), which should lead to a rapid decline. Sellers' key target is 157.54, where I will exit shorts and immediately open longs (aiming for a 20–25 pip reversal). Sellers can return at any moment — you need any hint from the central bank. Important: before selling, ensure MACD is below zero and just beginning to fall.

Scenario 2: Also consider selling if price tests 157.97 twice while MACD is in the overbought area. That would limit upside potential and trigger a reversal down. Expect declines toward 157.81 and 157.54.

What's on the chart:

Thin green line — entry price where you can buy the instrument.

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

Thin red line — entry price where you can sell the instrument.

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

MACD indicator. When entering the market, it's important to consider overbought and oversold zones.

Important. Novice Forex traders must be very cautious when deciding to enter the market. It is best to stay out before major 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: successful trading requires a clear trading plan, like the example above. Spontaneous trade decisions based solely on the immediate market situation are, by definition, a losing strategy for an intraday trader.