USD/JPY: on the eve of the meeting of the Bank of Japan

On the eve of tomorrow's meeting of the Bank of Japan, the yen is strengthening against its main competitors - the euro, pound and dollar, after it spent the past week in a pair with the dollar in a range, without deciding on the direction of further movement, and conflicting macro data received last week from Japan also contributed to this. The data suggests that Japan's manufacturing sector remains under pressure due to rising inflation, lower orders and the global economic crisis.

In the meantime, Bank of Japan Governor Haruhiko Kuroda dismisses the possibility of a rate hike in the short term. Previously, he repeatedly promised to maintain the current level of stimulus until inflation reaches 2% on a stable basis.

At the time of writing this article, USD/JPY was trading below 136.00, near 135.90, moving towards long-term support at 135.20. Its breakdown, and especially the breakdown of the long-term support level 132.80 (for more details, see "USD/JPY: technical analysis and trading recommendations for 12/19/2022") significantly increases the risks of breaking the bullish trend of the pair, which so far remains in the zone of the long-term bull market.

*) for the most important events of the week, see the Most important economic events of the week 12/19/2022 – 12/25/2022

Support levels: 135.20, 132.80

Resistance levels: 136.58, 137.75, 139.16, 142.10, 145.00

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