USD/JPY: Limited bearish potential amid persistent dollar’s demand
|The USD/JPY pair is trading just below the 50% retracement of its latest daily decline at 105.10 and the downside is limited as the dollar remains king in a risk-averse scenario, FXStreet’s Chief Analyst Valeria Bednarik reports.
Key quotes
“Japan returned from a long weekend publishing the preliminary September Jibun Bank Manufacturing PMI, which came in at 47.3 as expected, improving modestly from 47.2 in August. The country also published the July All Industry Activity Index, which was up 1.3%, missing expectations of 3.3%. Meanwhile, BoJ’s Kuroda offered a speech and said that the local economy is showing signs of a turnaround, adding that the central bank may extend the deadline for aid to pandemic-hit firms.”
“The US session will bring the Markit preliminary estimates of September PMIs. Manufacturing output is seen at 53.2 from 53.1 previously, while services activity is seen contracting to 54.7 from 55. Also, US Federal Reserve Chair Powell will testify on the economic impacts of COVID-19 before the House Select Committee. It seems unlikely he would add something new to what he said on Tuesday.”
“The 4-hour chart shows that the USD/JPY pair is developing above its 20 SMA, which have lost bullish strength and consolidates in the 104.50 price zone. Technical indicators, in the meantime, remain within positive levels, although losing bullish strength.”
“The bearish potential is well limited amid the prevalent dollar’s demand, while further gains will depend on US markets’ behavior later in the day.”
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