USD/JPY Video 28.09.20.
U.S. Dollar Loses Ground Against The Yen
USD/JPY pulled back from recent highs as the yen gained some support after weak performance during the previous week.
The U.S. dollar is mostly flat against a broad basket of currencies so general direction of the American currency had little impact on USD/JPY. However, the U.S. Dollar Index is located close to the key resistance level at 94.65, and a move above this resistance could push USD/JPY above the recent highs at 105.70.
There are no important economic reports scheduled to be released in the U.S. and Japan today, so USD/JPY will remain in the hands of general market sentiment.
However, some news may come from U.S. where Republicans and Democrats continue negotiations about the new coronavirus aid package.
On Sunday, U.S. House Speaker Nancy Pelosi indicated that consensus could be reached, providing support to S&P 500 futures which are gaining ground in early trading.
It remains to be seen whether the news about the coronavirus aid package could provide support to the U.S. dollar as it has recently gained upside momentum on fears that the world’s economic rebound may hit a wall due to the second wave of coronavirus.
USD/JPY failed to get to the test of the 20 EMA at 105.80 and pulled back closer to the nearest support level which has emerged at 105.20.
This support level has already been tested several times and proved its strength. If USD/JPY manages to settle below this support level, it will gain downside momentum and head towards the next support level at 104.90.
A move below the support at 104.90 will open the way to the test of the next support level at 104.70.
On the upside, USD/JPY faced material resistance at 105.70, just below the 50 EMA at 105.80. Most likely, the area between 105.70 and 105.80 will serve as a major resistance level for USD/JPY.
If USD/JPY settles above this resistance area, it will gain additional upside momentum and head towards the next major resistance level at 106.30.
For a look at all of today’s economic events, check out our economic calendar.