USD/JPY finally about to make the U-turn to 103s?
|- USD/JPY is under pressure as the US dollar is broadly sold off across the board.
- DXY has been telegraphing a downside correction for a number of days.
USD/JPY is under pressure in the Tokyo open as the USD slides in what is a potential making of a significant correction to the downside in the DXY, as forecasted in the prior analysis, here:
- USD/JPY Price Analysis: This could be the bull's last dance in the 105, eyes on 103.50s
- USD/JPY bulls testing critical resistance to no avail
- USD/JPY bulls not convincing enough in test of resistance
DXY's 5-wave forecast playing out
Fundamental updates
Meanwhile, there has been a couple of domestic releases for the yen with the Bank of Japan Summary of Opinions.
''It is appropriate for the bank to maintain the current monetary policy for the time being and, as before, take additional measures if necessary while closely monitoring the impact of COVID-19,'' the opinions stated.
We also had the Consumer Price Index for Tokyo in September arrive at 0.2% year on year vs the 0.1% expected, far behind the Bank of Japan's stubborn 2% national target. We will get the national data next month.
As for news from the European and US sessions, there were some encouraging reports across both sessions relating to Brexit signs of progress and European stimulus from the European Central Bank's President, Christine Lagarde who said the bank stands ready to act if needed.
US data was a touch encouraging with the Dallas Fed manufacturing activity survey rising to 13.6 in Sep (vs 9.5 estimate, 8.0 prior).
''The index has recovered after spending March-July in contraction mode when the region was affected by the pandemic and low oil prices,'' analysts at Westpac explained.
However, the heavy lifting was done on Wall Street's trading floors with US stocks jumping out of bed on the bid.
Portfolio reshuffling and bargain buying were potentially in play due to quarter-end flow following a dismal month. The dollar has been negatively correlated to US stocks which could be partly to blame for today's extension in the correction.
USD/JPY technical analysis
While below 106, a U-turn is expected towards 103.30/50.
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