USD/JPY Daily Forecast – Support At 105.80 In Sight
USD/JPY Video 14.09.20.
U.S. Dollar Finds Itself Under Pressure At The Start Of The Week
USD/JPY is trying to settle below the 20 EMA at 106.10 as the U.S. dollar is losing ground against a broad basket of currencies.
Currently, the U.S. Dollar Index is testing the major support level at the 20 EMA at 93.10. If the U.S. Dollar Index settles below the 20 EMA, it may gain strong downside momentum and head towards the next support level at 92.50. This scenario will be bearish for USD/JPY.
Japan’s Chief Cabinet Secretary Yoshihide Suga has easily won the ruling party leadership elections and is set to win the parliamentary vote on Wednesday and become Japan’s Prime Minister.
Suga is expected to continue the economic policies of the previous Prime Minister Shinzo Abe so his election should not have a big impact on USD/JPY trading dynamics.
Today, Japan reported that its Industrial Production increased by 8.7% month-over-month in July compared to analyst consensus which called for growth of 8%. Meanwhile, Reuters Tankan Index, which measures the mood of Japan’s manufacturers, remained deep in the negative territory.
This week is set to be very interesting for USD/JPY since both the U.S. Federal Reserve and the Bank of Japan will make their interest rate decisions. The Fed will announce its Interest Rate Decision on Wednesday while the Bank of Japan will make its Interest Rate Decision on Thursday. Both central banks are expected to push dovish messages and promise to use all available measures to support economic growth.
USD/JPY has managed to get below the 20 EMA at 106.10 and is trying to gain more downside momentum.
The nearest support level for USD/JPY is located at 105.80. If USD/JPY is able to get below this support level, it will head towards the major support at 105.30.
A move below 105.30 will signal that USD/JPY is ready to gain additional downside momentum. In this case, USD/JPY will head towards the support at 104.70.
On the upside, the 20 EMA at 106.10 will likely serve as the first resistance level for USD/JPY. If USD/JPY gets above the 20 EMA, it will find itself back in the range between the 20 EMA and the 50 EMA at 106.25. A move above the 50 EMA will open the way to the test of the next resistance at 106.55.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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