USD/JPY Forecast: Bears pressure towards July’s low

Valeria Bednarik FXStreet

USD/JPY Current price: 105.24

Market players showed little enthusiasm on progress in the US fiscal stimulus package.
Mixed Japanese data passed unnoticed, economic slowdown continues.
USD/JPY pressuring a critical Fibonacci support level and poised to extend its decline.

The USD/JPY pair has extended its monthly decline to 105.09 in Asian trading hours, as the greenback remained on the backfoot. An improvement in the market’s mood helped it bounce, with local shares surging in detriment of the safe-haven currency. However, nor equities neither USD/JPY were able to sustain gains, with the pair retreating from a daily high of 105.60 to the current 105.20 price zone.

Market players showed little enthusiasm to news indicating progress in the US fiscal stimulus package after House Speaker Nancy Pelosi hint her party might be willing to make cuts to their proposal to seal a deal with Republicans. Meanwhile, Japanese data released overnight was mixed, as the July Merchandise Trade Balance Total posted a surplus of ¥11.6 B, better than the ¥ -77.6 B expected. However, Machinery Orders fell monthly basis by 7.6% and were down by 22.5% when compared to a year earlier, worse than expected. The US session will bring the FOMC Meeting Minutes.

USD/JPY short-term technical outlook

The USD/JPY pair is challenging the 61.8% retracement of its July/August rally at 105.25, and poised to extend its decline. The 4-hour chart shows that the 20 SMA accelerated its decline above the current level and that it is about to cross below a mildly bearish 100 SMA. Technical indicators, in the meantime, resumed their declines after a modest correction from oversold readings. July low at 104.18 is a possible target for the upcoming sessions, should the market keeps selling the greenback.

Support levels: 105.10 104.80 104.40

Resistance levels: 105.60 106.00 106.40

View Live Chart for the USD/JPY

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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