USD/JPY Daily Forecast – Resistance At 105.70 Remains A Key Level

USD/JPY Video 06.10.20.

U.S. Dollar Tries To Gain More Upside Momentum Against Japanese Yen

USD/JPY continues its attempts to settle above the key resistance level at 105.70 as the U.S. dollar is mostly flat against a broad basket of currencies.

The U.S. Dollar Index made an attempt to gain downside momentum below 93.50 but found support near 93.35 and rebounded closer to 93.50. In case the U.S. Dollar Index continues to rebound, USD/JPY may have a chance to get above the resistance at 105.70 although its trading dynamics will continue to depend on the demand for the safe-haven yen.

At this point, demand for safe haven assets is decreasing as the U.S. President Donald Trump is out of hospital while traders hope that U.S. Republicans and Democrats will be able to reach a compromise deal on the new coronavirus aid package.

The yen played a role of the safe haven asset of last resort in recent days, so decreasing demand for safe haven assets may provide additional support to USD/JPY.

Yesterday, U.S. Services PMI report indicated that the rebound of the services segment continued, but it remains to be seen whether this trend will stay strong in case the U.S. fails to provide another round of stimulus in order to support consumer activity.

Technical Analysis

USD/JPY is currently trying to settle above the major resistance level at 105.70. This resistance level has already been tested many times, and it looks like USD/JPY will need additional catalysts to settle above this level and gain upside momentum.

If this happens, USD/JPY will move towards the next resistance level at 106.30 There are no material levels between 105.70 and 106.30 so this move may be fast.

In case USD/JPY manages to settle above 106.30, it will continue its upside move and get to the test of the next resistance level at 106.55.

On the support side, USD/JPY may get some support at the 20 EMA at 105.50. A move below the 20 EMA will open the way to the test of the next support level at 105.20.

If USD/JPY gets below the support at 105.20, it will head towards the next support at 104.90.

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