Recently at IronTrade, we noticed that the US Dollar remained in a situation when nothing could help it, but later the solution was found. The United States Congress approved a temporary increase in the debt ceiling. It is still unclear how far it will push the USD because such a measure is undoubtedly temporary and does not contribute to a fundamental resolution of the situation. Instead, it indicates that the US is in short supply.

Fundamental arguments:

The increase in US public debt is not a good solution. It is more like a patch, which strengthens the Dollar’s position in the world arena at the current stage. As for the JPY, such a situation is more advantageous because the manufacturers who profit in yens show a higher yield. However, the energy resources are generally paid for in the USD, which causes inflation, so desirable by the Japanese. I.e., the situation completely satisfies all parts of the USD/JPY pair.

Technical arguments:

From a technical point of view, the pair remains in a long-term upward trend, with historically significant resistance at 114 JPY for 1 USD and subsequent correction, presumably up to 112 USD/JPY.

Picture 1. A price chart of USDJPY for the period of 01.01.2017 – 15.10.2021.

As we can see in picture 1, the chart line changed from a long-term to a short-term trend. By this time, we expect fluctuations between the support and resistance lines ranging from 112 to 114 USDJPY.

Forecast

Given all this, IronTrade expects a DOWNWARD trend for this asset due to a short-term correction.

IronTrade recommends you use the RSI indicator (14 days) for better control over your positions.

RSI helps to recognize the periods when the market remains in an overbought or oversold state.

To keep the level of risk moderate, IronTrade also recommends keeping on average 3 trades DOWN and 2 trades UP.

You can use this trading idea while trading on IronTrade to maximise your income, but don’t forget about doing your own research. Good luck!