USD/JPY: The path of least resistance is down
|The USD/JPY fundamental picture has not changed from last week though the alternating risk-on and off from the Washington stimulus talks had worn out by Friday. The descending channel remains the main technical motif as restricted range gives technical indicators heavier trading influence, Joseph Trevisani, an Analyst at FXStreet, informs.
Key quotes
“Markets have not replaced the general safety trade outlook with an analysis based in comparative economics. With new COVID-19 diagnoses in Europe now outstripping those in the US, where they are rising also, the overall risk sensitivity is not likely to fade in the near future.”
“Technical considerations are the main force edging the USD/JPY lower. The descending channel that dates to late April and the market panic around the early COVID-19 scare has governed trading in the absence of countervailing factors and that should continue with support at 105.00 and 104.55 relatively weak and a large, sparsely traded area to the next support at 103.00, the path of least resistance is down.”
“In a strict economic comparison the US and the dollar would likely perform far better than Japan and the yen, but that somewhat nostalgic approach is weeks or months away.”
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