USD/JPY Daily Forecast – Yen Gained Additional Upside Momentum

USD/JPY Video 17.09.20.

Yen Continues To Strengthen Against The American Currency

USD/JPY remained under pressure as traders focused on the latest commentary from the U.S. Fed and the Bank of Japan.

The U.S. Fed left the interest rate unchanged and promised to keep rates low through 2023 even if inflation starts to pick up. However, the Fed did not announce any additional stimulus, pushing U.S. dollar higher against a broad basket of currencies.

The U.S. Dollar Index has recently tested the nearest resistance at 93.50 but pulled back closer to 93.30. In case the U.S. Dollar Index manages to settle above 93.50, it will gain upside momentum and provide some support to USD/JPY.

Currently, the general U.S. dollar strength fails to support USD/JPY as traders continue to increase their yen purchases. The Bank of Japan did not make any changes to its monetary policy despite the challenging state of Japan’s economy. The absence of additional stimulus provided support to the yen.

Today, USD/JPY traders will have a chance to evaluate U.S. Initial Jobless Claims and Continuing Jobless Claims reports while tomorrow they will focus on the latest inflation data from Japan. Analysts believe that Japan’s Core Inflation Rate declined by 0.4% year-over-year in August, suggesting that the Japanese economy continued to suffer from deflationary tendencies.

Technical Analysis

USD/JPY gained significant downside momentum after it managed to get below the major support level at 105.30. Currently, USD/JPY is testing the next important support level at 104.70.

In case this test is successful, USD/JPY will continue its downside move and head towards the next support level at 104.20. A move below the support at 104.20 will open the way to the test of the support level at 103.50.

On the upside, the previous support at 105.30 will likely serve as the first important resistance level for USD/JPY. If USD/JPY manages to settle above this level, it will head towards the 20 EMA at 105.80.

From a big picture point of view, USD/JPY left the previous trading range and has good chances to continue the current downside trend.

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