USD/JPY Daily Forecast – U.S. Dollar Shows Strength Against Japanese Yen

USD/JPY Video 05.10.20.

Yen Is Under Pressure At The Start Of The Week

USD/JPY managed to get closer to the key resistance level at 105.70 amid reports that U.S. President Donald Trump could be discharged from hospital after testing positive for COVID-19.

Previously, safe-haven Japanese yen enjoyed strong support from traders and investors who feared that Donald Trump’s health condition may deteriorate after he contracted COVID-19.

However, current reports suggest that the condition of the U.S. President is stable so the U.S. dollar is gaining ground against the yen. Most likely, the near-term dynamics of USD/JPY will mostly depend on the news about Trump’s health.

While the U.S. dollar has a safe haven asset status, investors preferred Japanese yen over U.S. dollar to protect themselves against uncertainty in recent days, and this trend will likely continue if the market becomes worried about the health of Donald Trump and its potential impact on the upcoming election.

In addition to news about the health of the U.S. President, traders will also focus on Services PMI data for September. Japan has already reported that Services PMI increased from 45.0 in August to 46.9 in September while analysts expected that Services PMI would grow to 45.6.

The report was better than expectations but Bank of Japan Governor Haruhiko Kuroda stated that uncertainty remained high and the pace of recovery would be moderate.

Technical Analysis

 

USD/JPY managed to gain upside momentum and is heading towards the test of the major resistance level at 105.70. The resistance at the 50 EMA is in the nearby, so USD/JPY will likely need additional catalysts to settle above the resistance area between 105.70 and the 50 EMA at 105.75.

If USD/JPY manages to get above this resistance area, it will gain additional upside momentum and head towards the next major resistance level at 106.30. A move above 106.30 will open the way to the test of the next resistance at 106.55.

On the support side, the nearest support level is located at 105.20. A move below this level will push USD/JPY towards the next support at 104.90. In case USD/JPY settles below the support at 104.90, it will gain additional downside momentum and move towards the support at 104.70.

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