USD/JPY Daily Forecast – Resistance At 105.70 Stays Strong

USD/JPY Video 29.09.20.

U.S. Dollar Attempts To Gain More Upside Momentum Against The Yen

USD/JPY continues its attempts to settle above the resistance at 105.70 while the U.S. dollar is losing some ground against a broad basket of currencies.

The U.S. Dollar Index is testing the nearest support level at 94.20, and a move below this level may put some pressure on USD/JPY.

Today, markets will focus on U.S. Presidential Debate and the fate of the new U.S. coronavirus aid package. Democrats have compiled a new proposal worth $2.2 trillion but it remains to be seen whether consensus will be reached since Republicans have previously indicated that they were not willing to spend that much money.

Tomorrow, Japan will provide several important economic reports which may impact USD/JPY trading. Japan’s Industrial Production is projected to increase by 1.5% month-over-month in August. Retail Sales are expected to decline by 3.5% year-over-year, while Housing Starts are expected to fall by 10.9% year-over-year.

If the reports show that Japan’s economy is weaker than expected, the yen could find itself under material pressure on speculation that Bank of Japan will have to introduce additional measures to support the economy.

Technical Analysis

USD/JPY faced strong resistance at 105.70 but continues its attempts to settle above this level. The next resistance level is located at the 50 EMA at 105.80 so USD/JPY will have to deal with a major resitance area at 105.70 – 105.80.

If USD/JPY manages to settle above this resistance area, it will gain additional upside momentum and head towards the next significant resistance level at 106.30.

The 20 EMA did not provide material support for USD/JPY in recent trading sessions so the nearest support level is located at 105.20. In case USD/JPY gets below the support at 105.20, it will gain additional downside momentum and head towards the next support level at 104.90.

A move below the support at 104.90 will open the way to the test of the next support level at 104.70.

From a big picture point of view, USD/JPY is trying to continue its rebound from the lows in the 104.00 – 104.20 area and maintains good chances to get back above 106.00.

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