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Vladimir Zernov

USD/JPY Video 12.10.20.

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U.S. Dollar Is Losing Some Ground Against Japanese Yen At The Beginning Of The Week

USD/JPY is trying to get below 105.50 while the U.S. dollar is mostly flat against a broad basket of currencies. The U.S. Dollar Index failed to settle below the 93 level and is currently trying to get above 93.10. If the U.S. Dollar Index gains upside momentum, USD/JPY may get some support after the recent sell-off.

Today, Japan reported that Machinery Orders declined by 15.2% year-over-year in August. Analysts expected that Machinery Orders will decrease by 15.6%. On a month-over-month basis, Machinery Orders grew by 0.2% compared to analyst consensus of -1%.

Meanwhile, Producer Prices decreased by 0.2% month-over-month in September while analysts believed that they would stay unchanged. On a year-over-year basis, Producer Prices decreased by 0.8% compared to analyst consensus of -0.5%.

Japan’s Machinery Orders report indicated that businesses started to invest more but this growth was very weak. The Producer Prices report highlighted the deflationary tendencies in Japan.

Japanese yen managed to gain ground against the U.S. dollar in recent trading sessions but it remains to be seen whether these gains will be sustainable. Demand for Japanese yen continues to depend on the general demand for safe haven assets.

The world markets look rather strong at the start of the week, indicating that demand for riskier assets is increasing which may put some pressure on the yen.

Technical Analysis

USD/JPY made an attempt to get below the nearest support level at 105.40 but failed to develop sufficient downside momentum and rebounded above 105.50.

If USD/JPY manages to settle below 105.40, it will move towards the next support level at 105.20. A move below the support at 105.20 will open the way to the test of the next support level at 104.90.

On the upside, the nearest resistance for USD/JPY is located at the 20 EMA at 105.60. In case USD/JPY gets above the 20 EMA, it will be able to get to the test of the major resistance level at 105.70.

If USD/JPY gets above this level, it will head towards the next resistance at the recent highs at 106.10.

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

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