USD/JPY Daily Forecast – U.S. Dollar Tries To Continue Its Rebound

USD/JPY Video 20.08.20.

All Eyes On U.S. Employment Reports

USD/JPY is trying to settle above the 20 EMA at 106.10 as the U.S. dollar attempts to continue its rebound which started after FOMC Minutes showed that the Fed was not ready to take additional measures in order to support the U.S. economy.

It looks like traders were so sure that FOMC Minutes would show that the Fed was ready to adopt an inflation target and push inflation beyond 2% that the absence of such news led to a rapid covering of short positions in the U.S. dollar.

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, is currently trying to settle above the 93 level after rebounding from the recent lows near 92.10.

In case the U.S. Dollar Index manages to gain more momentum above 93, USD/JPY will get additional support.

Today, USD/JPY traders will focus on the upcoming U.S. Initial Jobless Claims and Continuing Jobless Claims reports which may have a significant impact on near-term dynamics of the American currency.

Tomorrow, Japan will release Inflation Rate and Core Inflation Rate reports for July. While no major surprises are expected, traders will still watch for signs that inflation may show some signs of life.

Technical Analysis

USD/JPY is currently trying to settle above the nearest resistance level at the 20 EMA at 106.10.

In case USD/JPY is able to get above the 20 EMA, it will continue the current rebound and head towards the next resistance level at the 50 EMA at 106.50.

A move above the 50 EMA will open the way to the test of the next resistance level at 107.00. In my opinion, USD/JPY will need strong catalysts to get above 107.00 since most traders will have serious doubts about opening long positions above 107.00 due to the huge resistance in the 107.30 – 107.50 area.

On the support side, the nearest material support for USD/JPY is located at 105.30. Before the U.S. dollar started to rebound, USD/JPY tried to settle below this level but did not gain enough downside momentum.

In case USD/JPY settles below 105.30, it will head towards the next support level at 104.70.

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