The USD/JPY currency pair in Europe has met stiff resistance near the 142.15 level. The US Dollar Index (DXY) has shown erratic activity since encountering stiff resistance at 102.60, pointing to a further drop below 141.50.

.After a long weekend, S&P 500 futures dropped significantly before the US market opened. Again, risk aversion has been exacerbated by the Fed’s contradictory interest rate predictions. Despite Federal Reserve head Jerome Powell’s vow of two rate hikes this year, investors expect only one.

US Treasury yields also fell as a result of the USD Index. The current yield on 10-year US government bonds is 3.79%. Powell’s testimony before the Fed will remain a focal point. Fed Chair Powell’s decision to keep interest rates unchanged in July is likely attributable to monetary policy actions taken in June. We’ll talk about direction and the banking crisis.

More than half of Reuters’ economists predicted government and BoJ intervention if the yen fell to 145 per U.S. dollar. The Bank of Japan may secretly step in.

During the Asian session, Japan’s ministry reported an April industrial production decrease. Monthly economic data rose by 0.7%, surprising market analysts who had predicted a contraction of 0.4%. An actual 0.7% decline in industrial production exceeded the expected 0.3% decline.

Trade Idea

With strong resistance at 142.15 for USD/JPY and the potential for additional losses below 141.50, consider a short position on the pair. Monitor Fed Powell’s testimony for further guidance and be cautious of possible stealth intervention by the BoJ if the yen strengthens towards 145.