Trade Analysis and Tips for Trading the Japanese Yen

The price test at 145.21 in the first half of the day occurred when the MACD indicator had already moved significantly above the zero line, limiting the pair's upward potential. A second test of 145.21 shortly afterward, while MACD was in the overbought zone, led to the execution of Scenario #2 for selling, resulting in a drop of more than 30 points.

Further strengthening of the USD/JPY pair will depend directly on U.S. inflation data. Market participants expect to see the Consumer Price Index (CPI) for May, including the core CPI, which excludes food and energy prices. If inflation exceeds economists' forecasts, demand for the dollar will return, pushing the pair higher.

The impact of inflation data on USD/JPY is tied to the role of the U.S. Federal Reserve. High inflation typically prompts the Fed to tighten monetary policy — i.e., to raise interest rates. Higher interest rates make the U.S. dollar more attractive to investors, increasing demand. Additionally, dollar strength may be fueled by expectations of the Fed's future policy stance. If markets believe the Fed will act aggressively to combat inflation, this could also boost demand for the dollar and strengthen the USD/JPY pair.

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

Buy Signal

Scenario #1:I plan to buy USD/JPY today at the entry point near 145.57 (green line on the chart), targeting a rise to 146.48 (thicker green line). At 146.48, I plan to exit long positions and open shorts in the opposite direction, targeting a 30–35 point pullback. A strong bullish move is expected only after strong data.Important: Before buying, make sure the MACD indicator is above the zero line and just beginning to rise from it.

Scenario #2:I also plan to buy USD/JPY if the price tests 145.08 twice in a row while the MACD is in the oversold zone. This would limit the pair's downside and trigger a reversal upward. A rise toward the 145.57 and 146.48 levels is expected.

Sell Signal

Scenario #1:I plan to sell USD/JPY after a breakout below 145.08 (red line on the chart), expecting a quick decline. The key target for sellers will be 144.33, where I will exit short positions and enter long trades in the opposite direction, targeting a 20–25 point rebound. Selling pressure is likely to return on weak data. Important: Before selling, ensure the MACD is below the zero line and just starting to move down from it.

Scenario #2:I also plan to sell USD/JPY if the price tests 145.57 twice consecutively while MACD is in the overbought zone. This would limit the upward potential and trigger a market reversal to the downside. A decline toward the 145.08 and 144.33 levels is expected.

Chart Notes:

• Thin green line – suggested buy entry level
• Thick green line – suggested take-profit level or a zone to lock in profit; further growth beyond this level is unlikely
• Thin red line – suggested sell entry level
• Thick red line – suggested take-profit level or a zone to lock in profit; further decline beyond this level is unlikely
• MACD Indicator – use overbought and oversold zones as confirmation for market entries

Important Note for Beginner Traders:

Beginner Forex traders must make market entry decisions with great caution. It's best to stay out of the market before major fundamental reports are released to avoid exposure to sudden price swings. If you choose to trade during news releases, always place stop-loss orders to minimize losses. Without stop-losses, you can quickly lose your entire deposit — especially if you don't use proper money management and trade large volumes.

And remember: successful trading requires a clear trading plan, such as the one outlined above. Making spontaneous decisions based on current market movements is a losing strategy for intraday traders.