USD/JPY Daily Forecast – Resistance At 105.45 Stays Strong

USD/JPY Video 25.09.20.

Yen Remains Mostly Flat Against The U.S. Dollar Ahead Of The Weekend

USD/JPY is currently trying to settle above the nearest resistance level at the 20 EMA at 105.45.

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, has pulled back from recent highs and attempts to settle below 94.30.

If the U.S. Dollar Index gains additional downside momentum, USD/JPY may find itself under pressure.

Yesterday’s U.S. Initial Jobless Claims report indicated that the recovery of the job market has stalled and provided additional support to safe haven assets. Today, the U.S. will release Durable Goods Orders report for August which will provide additional information about the pace of the economic recovery.

In addition to economic news, traders will also focus on the potential negotiations between Democrats and Republicans about the new coronavirus aid package.

Democrats are currently trying to craft a new $2.2 trillion aid package. Previously, Republicans indicated that they were ready to negotiate a coronavirus aid bill worth $1.3 trillion. The two sides remain far apart but a sudden breakthrough may have a material impact on USD/JPY.

Technical Analysis

USD/JPY continues its attempts to get above the nearest resistance level at the 20 EMA at 105.45 but this level remains a strong obstacle on the way up. Despite the strength of the recent upside move, RSI remains in the moderate territory so there is enough room to gain more upside momentum in case the right catalysts emerge.

If USD/JPY manages to settle above the 20 EMA, it will head towards the next resistance level at the 50 EMA at 105.85. A move above the resistance at the 50 EMA will open the way to the test of the next resistance level at 106.30.

On the support side, the nearest material support level for USD/JPY is located at 104.90 although USD/JPY has also received some support near 105.20.

If USD/JPY moves below 104.90, it will gain more downside momentum and head towards the next support level at 104.70. A move below 104.70 will push USD/JPY closer to the next support area at 104.00 – 104.20.

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