USD/JPY Daily Forecast – Attempt To Settle Above 106.00

USD/JPY Video 08.10.20.

U.S. Dollar Attempts To Move Higher Against Japanese Yen

USD/JPY continues its attempts to settle above 106.00 while the U.S. dollar is mostly flat against a broad basket of currencies.

The U.S. Dollar Index made an attempt to settle below 93.50 but rebounded closer to 93.60. Yesterday, the Fed released FOMC Minutes from the last meeting, but the details of Fed’s discussion did not provide much clarity about potential next steps on the monetary policy front.

Today, the key economic reports for USD/JPY traders include U.S. Initial Jobless Claims and Continuing Jobless Claims. Tomorrow, the market will focus on Japan’s Household Spending report.

Analysts expect that Japan’s Household Spending increased by 3.2% month-over-month in August. On a year-over-year basis, Household Spending is projected to decrease by 6.9%. The pace of the rebound of consumer activity in Japan remains under question as the coronavirus pandemic dealt a heavy blow to consumer mood.

Technical Analysis

USD/JPY gained significant upside momentum after it managed to settle above the key resistance level at 105.70. RSI is in the moderate territory so there is plenty of room to gain upside momentum in case the right catalysts emerge.

The nearest significant resistance level for USD/JPY is located at 106.30. However, USD/JPY met some resistance just above 106.00, at 106.10. USD/JPY has already tested this level several times, and attempts to settle above 106.10 yielded no results.

In case USD/JPY manages to settle above the resistance at 106.10, it will quickly get to the test of the major resistance level at 106.30. A successful test of the resistance at 106.30 will open the way to the next resistance level at September highs at 106.55.

On the support side, the previous resistance at 105.70 will likely serve a strong support level for USD/JPY. The 50 EMA is located at 105.80 while the 20 EMA is at 105.60, so USD/JPY is set to have strong support in the 105.60 – 105.80 area.

In case USD/JPY manages to settle below this support area, it will gain downside momentum and head towards the minor support level at 105.40.

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