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USD/JPY Daily Forecast – U.S. Dollar Tries To Rebound

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USD/JPY Video 19.08.20.

Yen Finds Itself Under Pressure After The Release Of Weak Economic Data

USD/JPY is trying to settle above 105.50 as the yen is under some pressure after the release of disappointing economic data.

Japan’s Exports declined by 19.2% year-over-year in July which is a significant hit to the export-oriented economy.

Machinery Orders declined by 7.6% month-over-month in July compared to analyst consensus which called for growth of 2%. On a year-over-year basis, Machinery Orders were down by 22.5%.

Machinery Orders data is especially alarming since it shows whether businesses are ready to invest. The decline of Machinery Orders in July instead of the projected growth highlights the severity of the problems in Japan’s economy.

Meanwhile, the U.S. Dollar Index has recently settled below 92.50 as uncertainty regarding the new U.S. coronavirus aid package continued to put pressure on the American currency.

U.S. House Speaker Nancy Pelosi has recently indicated that Democrats were ready to cut their previous coronavirus aid package proposal in half but it was not clear whether Republicans would agree to the package that exceeds their own proposal by as much as $1 trillion.

Later today, traders will have a chance to evaluate FOMC Minutes from the latest Fed meeting. Market participants will be searching for indications that the Fed is ready to employ an average inflation target that will aim to push inflation above 2%.

Technical Analysis

USD/JPY failed to settle below the nearest support level at 105.30 and tries to settle above 105.50.

In case USD/JPY gains more upside momentum, it will head towards the test of the resistance area between 106.00 and the 20 EMA at 106.10.

RSI is at moderate levels, and there is plenty of room to gain more upside momentum after the recent sell-off in case the right catalysts emerge.

In case USD/JPY manages to get above the 20 EMA, it will head towards the next resistance level at the 50 EMA at 106.50.

On the support side, the first important support level for USD/JPY is still located at 105.30. A move below this support level will open the way to the test of 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

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