USD/JPY Daily Forecast – Stuck In A Range Between 20 EMA and 50 EMA

USD/JPY Video 04.09.20.

Yen Stabilizes After Recent Weakness

USD/JPY remains in the range between the 20 EMA near 106.00 and the 50 EMA near 106.30 after a failed attempt to settle above the 50 EMA.

Yesterday, USD/JPY tried to get above the 50 EMA but did not manage to gain sufficient upside momentum as the U.S. Dollar Index failed to settle above its 20 EMA at the 93 level.

Today, the U.S. Dollar Index is flat but the situation may change quickly after the release of U.S. employment reports. The U.S. will provide Non Farm Payrolls and Unemployment Rate reports which are expected to show that the situation in the U.S. job market continues to improve.

The market will pay close attention to the pace of this improvement. In case the employment reports are disappointing, the U.S. dollar may find itself under increased pressure against a broad basket of currencies which would be bearish for USD/JPY.

While traders do not expect any major shifts in Japan’s economic policy after the health-related resignation of Japan’s Prime Minister Shinzo Abe, the uncertainty over his successor’s policies may put some pressure on the yen in the upcoming trading sessions.

Technical Analysis

USD/JPY is taking a pause before the next move as it stays in the range between the 20 EMA and the 50 EMA.

In case USD/JPY manages to settle above the 50 EMA, it will gain more upside momentum and head towards the next major resistance level at 107.00. Along the way, USD/JPY may also face some resistance at the high of the recent upside move at 106.55.

The resistance at 107.00 has been tested several times back in August, and USD/JPY will need significant catalysts to get above this strong level.

On the support side, a move below the 20 EMA will open the way to the test of the next support level at 105.30. This support level has been tested many times in August, and USD/JPY gained significant support each time it declined to this level.

In this light, USD/JPY will likely need additional U.S. dollar weakness to breach this level and start a new downside trend.

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