USD/JPY Daily Forecast – Yen Continues Its Upside Move
USD/JPY Video 16.09.20.
U.S. Dollar Remains Under Significant Pressure Against The Yen
USD/JPY is currently trying to settle below the major support level at 105.30 as the yen enjoys strong upside momentum ahead of U.S. Fed Interest Rate Decision.
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USD/JPY found itself under significant pressure after it settled below the 20 EMA at 105.95. Currently, the U.S. Dollar Index is losing some ground against a broad basket of currencies but the significant momentum in USD/JPY is mostly caused by the strength of the yen.
There are signs that U.S. Democrats and Republicans may reach consensus on the new coronavirus aid package.
Yesterday, U.S. House Speaker Nancy Pelosi stated that Democrats were ready to postpone the October recess to discuss the deal with Republicans. At this point, lawmakers are set to talk about the new $1.5 billion coronavirus aid bill proposal.
While traders will focus on U.S. Fed Interest Rate Decision which will be announced today and the upcoming Bank of Japan Interest Rate Decision that is due to be published tomorrow, today’s U.S. Retail Sales report is also of great interest.
U.S. Retail Sales are expected to grow by 1% on a month-over-month basis in August. Any signs of weakness in U.S. consumer activity may increase demand for safe haven currencies like the Japanese yen.
Technical Analysis
USD/JPY gained significant downside momentum and is trying to settle below the nearest support level at 105.30.
In case this attempt is successful, USD/JPY will head towards the next support level at 104.70. RSI is still in the moderate territory so there is plenty of room to gain momentum in case the right catalysts emerge.
If the test of the support at 104.70 is successful, USD/JPY will move towards July lows at 104.20.
On the upside, USD/JPY needs to get back above the major support at 105.30 to have a chance for a rebound. If this happens, USD/JPY will have to deal with the resistance at 105.55.
A move above the resistance at 105.55 will open the way to the test of the 20 EMA at 105.95.
For a look at all of today’s economic events, check out our economic calendar.