USD/JPY Daily Forecast – Attempt To Settle Below Support At 104.70USD/JPY managed to get below the support at 104.70 and continues its downside move.
USD/JPY Video 18.09.20.
Yen Gains More Ground Against The U.S. Dollar
USD/JPY continues its downside move and is trying to gain additional downside momentum below the support level at 104.70.
The U.S. dollar is losing ground against a broad basket of currencies as traders are worried about the pace of U.S. economic recovery after yesterday’s reports on employment and housing.
Today, Japan reported inflation numbers for August. On a year-over-year basis, Inflation Rate was 0.2% while Core Inflation Rate was -0.4%. Prices remain weak which is not surprising given the challenging state of Japan’s economy.
While the Bank of Japan has recently reiterated that it was ready to support the economy with all available measures, there is little it can do about the problems caused by the coronavirus pandemic.
Bank of Japan’s interest rate is already in the negative territory at -0.1% while the never-ending asset purchase program yields little results in terms of support to prices.
In these circumstances, yen continues to get support against the U.S. dollar as the U.S. Fed did not exhaust all possible ways of monetary easing while the Bank of Japan appears to have reached its limits.
USD/JPY managed to get below the nearest support level at 104.70 and is trying to gain additional downside momentum.
The next support for USD/JPY is located at 104.20. If USD/JPY settles below this level, it will head towards the next support at 103.50.
While the recent downside move was strong, RSI is still in the moderate territory so there is plenty of room to gain more momentum.
On the upside, the previous support level at 104.70 will likely serve as the first resisance level for USD/JPY.
If USD/JPY manages to get back above this level, it may gain upside momentum and head towards the major resistance level at 105.30.
A move above the resistance at 105.30 will open the way to the test of the next resistance level at the 20 EMA at 105.70.
For a look at all of today’s economic events, check out our economic calendar.