USD/JPY Daily Forecast – U.S. Dollar Continues Its Attempts To Get Above The 50 EMA

USD/JPY Video 11.09.20.

Range-Bound Trading Continues

USD/JPY remains in a very tight range between the support at the 20 EMA at 106.10 and the resistance at the 50 EMA at 106.25 as the U.S. dollar is mostly flat against a broad basket of currencies.

Yesterday, the U.S. Dollar Index found itself under significant pressure after the release of disappointing U.S. Initial Jobless Claims and Continuing Jobless Claims reports.

However, it managed to find support at 92.70 and rebounded back above the 93 level. Currently, the U.S. Dollar Index is trying to stay above the 20 EMA at 93.10. If this attempt is successful, the U.S. Dollar Index will gain more upside momentum which will be bullish for USD/JPY.

While the recent employment reports indicated that the U.S. economic recovery may have encountered its first material problems, the situation in Japan’s economy is not looking better.

A recent survey indicated that Japanese companies planned to cut their capital expenditure by as much as 6.8% in the current fiscal year. Obviously, economic recovery cannot be robust without a healthy increase in capital spending.

Today, traders will focus on the upcoming U.S. inflation reports. Core Inflation Rate is expected to stay unchanged at 1.6% while Inflation Rate is projected to increase from 1% to 1.2% on a year-over-year basis.

Technical Analysis

USD/JPY is still trading in the range between the 20 EMA and the 50 EMA. In case USD/JPY manages to settle above the 50 EMA, it will head towards the next material resistance level at 107.00. Along the way, USD/JPY may face some resistance at 106.55.

On the support side, a move below the 20 EMA will open the way to the test of the next significant support level at 105.30. USD/JPY may also get some support near the recent lows at 105.80.

From a big picture point of view, USD/JPY remains stuck in a very tight trading range. Most likely, USD/JPY will need additional catalysts to get out of the range and develop some momentum. While a move out of this range may be fast, near-term perspectives of USD/JPY will be still limited by very strong levels at 105.30 and 107.00.

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