USD/JPY maintains positive dynamics, accelerating growth. Today, the pair exceeded the maximum of the previous month (at 125.10), continuing to grow for the 6th week in a row.

The divergence in the monetary policy rates of the Fed and the Bank of Japan is likely to increase, creating prerequisites for further growth of USD/JPY. In this case, the pair will head towards multi-year highs near the 135.00 mark reached in January 2002.

The nearest upside target is 125.65 (100% Fibonacci retracement to the pair's fall from 125.65 that started in June 2015). In the event of a breakdown of this resistance level, USD/JPY will continue to rise until it "gropes" for new resistance levels. The main reason is the prospect of further divergence between the monetary policy trajectories of the Fed and the Bank of Japan. The weakening of the yen is also facilitated by the events in Ukraine, where Russia is conducting a military special operation, and inflation accelerated in Japan against the backdrop of a sharp rise in energy prices.

In an alternative scenario, and after the breakdown of the support level of 123.33 (200 EMA on the 1-hour chart), USD/JPY will head towards the support levels of 121.30 (local level), 120.23 (200 EMA on the 4-hour chart), which can only be considered as a corrective decline.

A deeper decline in the current situation is unlikely. Trading above the key support levels of 114.50 (200 EMA on the daily chart and local highs), 110.15 (200 EMA on the weekly chart, and the 38.2% Fibonacci retracement to the fall of the pair from the level of 125.65 that began in June 2015), USD/JPY remains in the bull market zone.

Support levels: 125.10, 124.40, 123.33, 121.30, 120.23, 116.00, 114.50, 113.10, 110.15

Resistance levels: 125.65

Trading tips

Buy Stop 125.50. Stop Loss 124.40. Take-Profit 125.65, 126.00, 127.00, 128.00, 134.00, 135.00

Sell Stop 124.40. Stop Loss 125.50. Take-Profit 124.00, 123.33, 121.30, 120.30