USD/JPY Forecast: Consolidating gains, more gains likely

USD/JPY Current price: 105.42

• Financial markets maintain a positive tone but left the euphoria behind.
• The US celebrates a holiday, although Wall Street will remain open.
• USD/JPY is technically bullish, with investors eyeing an advance towards 106.00.

The USD/JPY pair is trading marginally higher this Wednesday, as the greenback retains its strength against most major rivals, although with movements limited, alongside those in equities. Financial markets have finished digesting the latest news on the US presidential election and progress in coronavirus vaccines.

At the same time, the number of contagions keeps rising. The US reported a record high of roughly 135K new cases on Tuesday, while the global daily total is above 500K. The pandemic is still taking its toll on economic progress, although the US has long ago decided to maintain its economy open.

Japan published the preliminary estimate of October Machine Tool Orders, which were down 5.9% YoY, improving from -15%. The US won’t publish macroeconomic data, as the country celebrates a holiday today, although Wall Street will remain open.

USD/JPY short-term technical outlook

The USD/JPY pair trades at the upper end of the weekly range, a few pips below its high at 105.64. The short-term picture continues to favor the upside, with a probable bullish target at 106.00, where the pair has a daily descendant trend line coming from March high. The 4-hour chart shows that the 200 SMA continues to provide support, while the 20 SMA keeps advancing below it. Technical indicators, in the meantime, consolidate within overbought levels without signs of upward exhaustion.

Support levels: 104.90 104.50 104.05

Resistance levels: 105.65 106.00 106.40

 View Live Chart for the USD/JPY