USD/JPY Technical Analysis and Intraday Trading Outlook

USD/JPY Market Review

During the recent session, the USD/JPY pair tested the 157.97 level as the MACD indicator began moving upward from the zero line, confirming a valid buying opportunity. However, upside momentum proved limited, with the pair advancing only about 10 pips before stalling as the market entered a waiting mode ahead of upcoming US economic data.

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The US dollar has lacked strong buying catalysts, particularly after Federal Reserve comments failed to provide clear signals regarding further rate hikes or an imminent pause. Attention has now shifted toward upcoming US industrial data, including industrial production forecasts of +0.4% month-on-month and capacity utilization expectations at 76.5%. If these prints align with consensus forecasts, the dollar is unlikely to receive a significant boost.

Additional focus centers on September import-price data and the monthly US budget execution report. A projected deficit of $34.7 billion, compared to $166.8 billion previously, indicates potential increases in Treasury borrowing, which may pressure bond yields. Because falling yields have recently weighed on the greenback, the Japanese yen could see room for strengthening toward the end of the week.

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Intraday Trading Scenarios

For long positions, traders can monitor a potential entry near 157.97, targeting 158.33, where a take-profit and reversal into short positions can be considered. Alternatively, buying can be evaluated if the price tests 157.81 twice while the MACD indicator remains in oversold territory, signaling a limited downside and a potential reversal higher toward 157.97 and 158.33.

For short positions, selling opportunities emerge following a decisive break below the 157.81 support level, with a primary downside target set at 157.54. Another selling scenario involves a double test of the 157.97 level while the MACD is in overbought territory, which would suggest limited upside and target a downward retracement toward 157.81 and 157.54.

Risk Management and Strategy

Traders must exercise caution and maintain strict risk management when navigating high-impact fundamental data releases. Implementing stop-loss orders and adhering to a structured trading plan are essential practices to protect capital against sudden market volatility and avoid trading purely on noise.

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