Yahoo News USD/JPY Daily Forecast – U.S. Dollar Rebounds From Recent Lows
USD/JPY Video 31.08.20.
U.S. Dollar Managed To Find Support After The Recent Sell-Off
USD/JPY continues its rebound from the support level at 105.30 as the U.S. dollar remains mostly flat against a broad basket of currencies.
Japan’s Prime Minister Shinzo Abe has recently resigned due to health problems but traders do not expect any material changes to Japan’s economic policy.
Japan has recently released several important economic reports. Retail Sales decined by 2.8% year-over-year in July compared to analyst consensus which called for a decline of 1.7%. On a month-over-month basis, Retail Sales decreased by 3.3% which indicates that consumer activity remains under significant pressure.
Meanwhile, Industrial Production increased by 8% month-over-month compared to analyst consensus which called for growth of 5.8%. On a year-over-year basis, Industrial Production declined by 16.1%.
Housing Starts declined by 11.4% year-over-year while Construction Orders shrank by 22.9%.
Consumer Confidence declined from 29.5 in July to 29.3 in August so the negative trend in Japan’s Retail Sales will likely persist.
Japan’s economy continues to struggle from the damage dealt by the coronavirus pandemic. However, the U.S. Fed’s decision to target an average inflation of 2% may continue to put pressure on the U.S. dollar and limit any potential upside of USD/JPY.
Technical Analysis
USD/JPY has found support at 105.30 and is rebounding after the recent sell-off. The nearest resistance level for USD/JPY is located at the 20 EMA at 106.00.
In case USD/JPY manages to settle above the resistance at the 20 EMA, it will head towards the next resistance level at the 50 EMA at 106.30.
A move above the 50 EMA will open the way to the test of the next resistance level at 107.00. This level has been tested several times in August but USD/JPY will need significant upside catalysts to move above 107.00 as traders will demand material reasons to open long positions right under the major resistance at 107.30 – 170.50.
On the support side, the nearest support level for USD/JPY is located at 105.30. In case USD/JPY manages to settle below this level, it will gain more downside momentum and head towards the next support at 104.70.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
