USD/JPY Daily Forecast – Test Of Resistance At 104.70

USD/JPY Video 22.09.20.

U.S. Dollar Tries To Gain More Ground Against The Yen

USD/JPY is trying to settle above the resistance at 104.70 as the U.S. dollar continues to gain ground against a broad basket of currencies.

The U.S. dollar received significant support from fears about a potential second wave of lockdowns in Europe, and the U.S. Dollar Index is currently testing the 50 EMA level at 93.80. A move above this level will lead to increased upside momentum and provide additional support to USD/JPY.

Today, the U.S. will provide Existing Home Sales data for August. Existing Home Sales are expected to increase from 5.86 million to 6 million. Traders will evaluate whether the housing market shows any signs of a slowdown amidst uncertainty about the future pace of the economic recovery.

It remains to be seen whether the U.S. dollar will continue to gain ground against the yen which also serves as a safe haven currency. For now, the U.S. dollar benefits from virus fears but the American currency will likely require support from positive economic reports to continue its upside move against the yen.

Technical Analysis

USD/JPY is currently testing the nearest resistance level at 104.70. If this test is successful, USD/JPY will have a chance to continue its rebound.

In this case, the nearest material resistance level for USD/JPY is located at 105.30, although USD/JPY may also face some resistance at 104.90.

On the support side, the first important support level for USD/JPY is located at 104.20. A move below this level will open the way to the test of the recent lows at 104.00.

While USD/JPY is currently trying to rebound, it remains in a downside trend. Failure to settle above the resistance at 104.70 will likely lead to increased downside momentum so USD/JPY will head towards the recent lows.

Most likely, USD/JPY will need additional catalysts to continue its rebound. If the U.S. dollar fails to develop more momentum against a broad basket of currencies, USD/JPY will likely resume its downside trend.

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