USD/JPY Daily Forecast – Another Attempt To Settle Above The 50 EMA

USD/JPY Video 07.09.20.

U.S. Dollar Fails To Gain More Upside Momentum

USD/JPY made an attempt to settle above the nearest resistance level at the 50 EMA at 106.30 but failed to gain sufficient upside momentum.

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, failed to get above the key 93 level but stays just below this resistance level.

A move above the 20 EMA at 93 will signal that the U.S. Dollar Index is ready to start a new upside trend which would be bullish for USD/JPY.

Tomorrow, Japan will publish the final estimate of its second-quarter GDP Growth Rate. On a quarter-over-quarter basis, GDP is expected to shrink by 8.1%. On an annualized basis, GDP is projected to suffer losses of as much as 28.6%.

There are no important economic releases scheduled to be published in the U.S. in the next few days so USD/JPY trading dynamics will heavily depend on general market sentiment.

Traders will also watch the developments in the U.S. government bond market. On Friday, 10-year U.S. government bond yields jumped by almost 13% to 0.721% while 30-year U.S. government bond yields increased to 1.471%. Higher bond yields may ultimately provide more support to the American currency.

Technical Analysis

 

USD/JPY continues to trade in a range between the 20 EMA at 106.10 and the 50 EMA at 106.30. The range is getting tighter day by day so USD/JPY will soon break out of this range.

In case USD/JPY manages to settle above the 50 EMA at 106.30, it will head towards the material resistance level at 107.00. The resistance at 107.00 is set to be a very strong level for USD/JPY so it will need significant upside catalysts to move above this level.

On the support side, a move below the 20 EMA at 106.10 will open the way to the test of the next important support level at 105.30.

From a big picture point of view, USD/JPY has been trading in a wide range between the support at 105.30 and the resistance at 107.00 since early August, and it will need material catalysts to get out of this range.

For a look at all of today’s economic events, check out our economic calendar.