USD/JPY Daily Forecast – U.S. Dollar Rebounds Against Japanese Yen
USD/JPY Video 13.10.20.
Japanese Yen Failed To Continue Its Upside Move
USD/JPY found support near 105.25 and rebounded closer to 105.50 as the U.S. dollar moved higher against a broad basket of currencies.
The U.S. Dollar Index continues its attempts to move above the resistance area at 93.20 – 93.25. In case the U.S. Dollar Index gets above this level, it will gain additional upside momentum which will provide support to USD/JPY.
Yesterday, Bank of Japan Governor Haruhiko Kuroda tried to assure the market that Japan’s central bank did not run out of policy measures to support the economy.
He stated that Bank of Japan was ready to take additional easing measures but also added that Japan’s inflation would stay negative for some time. In contrast, today’s U.S. Inflation Rate report is projected to indicate that inflation increased from 1.3% in August to 1.4% in September on a year-over-year basis.
In addition to his comments about inflation, Kuroda highlighted the positive yields on Japan’s long-term government bonds. While yields on 10-year bonds are near zero, longer-term bonds have positive yields, attracting investors and providing constant demand for Japanese yen.
USD/JPY received support above 105.20 and gained upside momentum. The nearest resistance level for USD/JPY is located at the 20 EMA at 105.55.
If USD/JPY manages to settle above this level, it will head towards the test of the major resistance at 105.70. Previously, the resistance at 105.70 was a major obstacle on the way up for USD/JPY. Most likely, USD/JPY will need additional upside catalysts to get above 105.70 if it gets to the test of this level.
In this scenario, USD/JPY will gain additional upside momentum and head towards the next resistance level at October highs at 106.10.
On the support side, USD/JPY may get some support at 105.40. A move below this level will open the way to the test of the next support level near 105.20.
If USD/JPY declines below 105.20, it will gain additional downside momentum and head towards the next support level near October lows at 104.90.
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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