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James Hyerczyk
USD/JPY

The Dollar/Yen is inching lower on Friday in an extremely lackluster trade. Investors shrugged off U.S. economic data and another late session sell-off in the U.S. stock indexes. It looked as if investors were not willing to commit to either side of the market ahead of next week’s U.S. Federal Reserve and Bank of Japan monetary policy decisions.

At 20:45 GMT, the USD/JPY is trading 106.101, down 0.034 or -0.03%.

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On the data front, U.S. consumer prices rose solidly in August, with the cost of used cars and trucks increasing by the most in more than 51 years likely as Americans shunned public transportation because of fears of contracting COVID-19.

In the 12 months through August, the CPI increased 1.3% after gaining 1.0% in the 12 months through July. This was slightly higher than the 1.2% estimate.

In the 12 months through August, the so-called core CPI climbed 1.7% after rising 1.6% in July.

As far as risk sentiment is concerned, U.S. technology stocks tumbled this week as investors reconsidered their high valuations against a backdrop of a slow global economic recovery from the coronavirus-led slump.

Daily USD/JPY

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 107.049 will change the main trend to up. A move through 105.104 will signal a resumption of the downtrend.

The main range is 107.049 to 105.104. Its retracement zone at 106.077 to 106.306 was straddled all week.

The main support is a retracement zone at 105.619 to 105.282. The main resistance is a retracement zone at 107.019 to 107.687.

Short-Term Outlook

Given the sideways trade this week, it looks like the near-term direction is going to be determined by trader reaction to the 50% level at 106.077 and the Fibonacci level at 106.306.

Look for an upside bias to develop on a sustained move over 106.306. This could lead to a quick test of 106.550.

A sustained move under 106.077 will signal the presence of sellers. This could trigger a steep break into 105.798, followed by the 50% level at 105.619.

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