USD/JPY Daily Forecast – Attempt To Settle Below The 20 EMA

USD/JPY Video 09.09.20.

Yen Gains Ground As Demand For Safe Haven Assets Increases

USD/JPY  declined below 106.00 despite the U.S. dollar’s rebound against a broad basket of currencies as the global risk-off sentiment increased demand for Japanese yen.

Yesterday, S&P 500 declined by almost 3% as the sell-off in tech stocks continued. This move put pressure on global market sentiment and provided support to the yen which often benefits from global market turmoil.

Meanwhile, the U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, continues its rebound and is trying to settle above 93.50.

A move above this level will likely lead to increased upside momentum and may provide some support to USD/JPY.

Tomorrow, U.S. will provide its new Initial Jobless Claims and Continuing Jobless Claims reports which may have a significant impact on the near-term fate of the U.S. dollar.

The Initial Jobless Claims report is expected to show that 846,000 Americans filed for unemployment benefits in a week while Continuing Jobless Claims are projected to decline to 12.93 million.

Better-than-expected U.S. employment reports may provide additional support to the U.S. dollar which would be bullish for USD/JPY. In case the current condition of the job market is worse than expected, U.S. dollar’s rebound may take a pause, putting additional pressure on USD/JPY.

Technical Analysis

USD/JPY is currently trying to settle below the 20 EMA at 106.05. In case this attempt is successful, USD/JPY will gain more downside momentum and move towards the next material support level at 105.30.

A successful test of the support at 105.30 will open the way to the next support level at 104.70. In addition, a move below the support at 105.30 will signal that USD/JPY is ready to establish a new downside trend.

On the upside, the previous support at the 20 EMA will likely serve as the first important resistance level for USD/JPY. In case USD/JPY manages to get above the 20 EMA, it will find itself back in a tight range between the 20 EMA at 106.05 and the 50 EMA at 106.25.

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