USD/JPY Forecast: Holding on to weekly gains

Valeria Bednarik FXStreet

USD/JPY Current price: 105.42

BOJ’s Minutes showed that policymakers are open to add easing.
A sour market mood kept USD/JPY inside a tight intraday range.
USD/JPY could resume its decline on a break below 104.85.

The USD/JPY pair spent the day hovering around the 105.40 level, making no progress on a daily basis. The upside was capped throughout the first half of the day by the dismal ruling sentiment, later by the easing dollar’s demand. US Treasury yields, in the meantime, remained under pressure, falling after the US published weekly unemployment claims, but recovered ahead of the close.

At the beginning of the day, the Bank of Japan published the Minutes of its latest meeting earlier today, and the document showed that policymakers are willing to act as needed to counter the effects of the pandemic on the economy. This Friday, the country will publish the August Corporate Service Price Index, foreseen at 1.4% from 1.2% in the previous month.

USD/JPY short-term technical outlook

The USD/JPY pair has spent the day trading around the 61.8% retracement of its latest daily decline at 105.40. The 4-hour chart shows that the 20 SMA has continued to advance below the current level, now around 105.00. Technical indicators remain well into positive levels but have turned flat. The bearish potential seems well limited as long as the pair holds above 104.85, the 38.2% retracement of the mentioned decline.

Support levels: 105.10 104.85 104.50

Resistance levels: 105.55 105.90 106.25

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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