USD/JPY Daily Forecast – U.S. Dollar Tries To Stabilize After Yesterday’s Sell-Off

USD/JPY Video 15.09.20.

Positive Economic Data From China May Put Some Pressure On The Yen

USD/JPY managed to settle below 106.00 and is trying to develop additional downside momentum as the U.S. dollar remains under pressure against a broad basket of currencies.

The U.S. Dollar Index has managed to get below the 20 EMA at 93.10 but received some support near 92.85. In case the U.S. Dollar Index moves below this level, the American currency will find itself under increased pressure which will be bearish for USD/JPY.

Meanwhile, better-than-expected economic data from China may put some pressure on the yen which is one of the main safe haven currencies as positive news from one of the world’s biggest economies increase appetite for riskier assets.

China’s Retail Sales have managed to grow by 0.5% year-over-year in August, suggesting that consumer activity was getting back to normal. China’s Industrial Production also showed strength, growing by 5.6% year-over-year.

There are no important economic reports scheduled to be released in Japan today so USD/JPY traders will focus on U.S. Industrial Production and Manufacturing Production reports which are expected to show that U.S. economic recovery continues, although at a slower pace.

Technical Analysis

USD/JPY gained material downside momentum once it was able to get below the 20 EMA at 106.05 and tries to continue its downside move. The nearest support level for USD/JPY has emerged at 105.55.

In case USD/JPY manages to settle below this level, it will gain additional downside momentum and get to the test of the major support level at 105.30.

A move below the support at 105.30 will signal that USD/JPY will try to establish a new downside trend. In this scenario, USD/JPY will head towards the next support level at 104.70.

On the upside, the previous support at the 20 EMA will serve as the first resistance level for USD/JPY. A move above this level will push USD/JPY to test the next resistance at the 50 EMA at 106.20.

If USD/JPY moves above the 50 EMA, it will gain additional upside momentum and get to the test of the next resistance level at 106.55.

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