USD/JPY Forecast: Modest advance within range

Valeria Bednarik FXStreet

USD/JPY Current price: 105.54

Financial markets keep focusing on a US fiscal stimulus package.
The macroeconomic calendar has nothing relevant to offer this Tuesday.
USD/JPY is nearing the upper end of its latest range, breakout not yet clear.

The USD/JPY pair has managed to gain some pips overnight, hitting a daily high of 105.61 and trading now a few pips below the level. Investors are cautiously optimistic about o US stimulus aid package, as talks continued, although Democrats 48-hour deadline ends today. Following Wall Street’s slump, Asian and European stocks are trying to post gains, with major indexes trading mixed around their opening levels. Still, the pair is up on higher government debt yields as the yield on the benchmark 10-year Treasury note is up to 0.77%.

The macroeconomic calendar had little to offer overnight, without data coming from Japan. The US will publish today September Building Permits, and Housing Starts from the same month, both seen improving modestly from August readings.

USD/JPY short-term technical outlook

The USD/JPY pair has limited chances of extending its advance in the near-term. The 4-hour chart shows that it is developing above a modestly bullish 20 SMA, although the price is stuck around directionless and converging 100 and 200 SMAs. The Momentum indicator advances within positive levels, while the RSI consolidates around 58, both rather reflecting the intraday advance than suggesting further gains ahead. A decision on the US fiscal stimulus package could be the catalyst the market needs to break the ongoing USD/JPY range.

Support levels: 105.00 104.65 104.20

Resistance levels: 105.80 106.25 106.60

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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