USD/JPY Forecast: Recovering within range ahead of Trump’s words
|USD/JPY Current price: 109.16
- Japan’s Machinery Tool Orders collapsed in October, according to preliminary estimates.
- US President Trump is due to deliver a speech, may refer to the US-China trade deal.
- USD/JPY neutral for the week at around 109.20, downside potential well limited.
The American dollar is resuming its advance against its major rivals following Monday’s downward correction, with the USD/JPY pair now trading around 109.20. The recovery of the pair was underpinned by rising equities, up in Asia and the EU, and decreased demand for safety, with government debt yields holding on to higher ground.
Japan released October´s money supply, with the monetary aggregate M2 up by 2.5% year-on-year, following a 2.4% increase in the previous month. Machine Tool Orders, on the other hand, plummeted 37.4% after decreasing by 35.5% in the previous month.
The market is waiting for an update on the US-China trade deal. This Tuesday, US President Trump is due to deliver a speech at the Economic Club of New York and could comment on the matter. Ahead of Trump’s words, Federal Reserve vice-chair, Richard Clarida, will deliver a speech on monetary policy. The country won’t release relevant macroeconomic data.
USD/JPY short-term technical outlook
The USD/JPY pair is trading neutral ever since the week started. In the 4-hour chart, it is seesawing around a flat 20 SMA, while technical indicators lack directional strength, the Momentum around its 100 level and the RSI at 56. The downside potential seems limited as long as the pair holds now above 108.91, the weekly low. Trump comments later today could be the catalyst speculative interest is waiting for.
Support levels: 108.90 108.65 108.20
Resistance levels: 109.35 109.60 110.00
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