USD/JPY Forecast: Safe-haven assets on demand as fear leads

Valeria Bednarik FXStreet

USD/JPY Current price: 105.30

No fiscal stimulus in the US and coronavirus cases in Europe fuel risk-off trading.
US Initial Jobless Claims for the week ended October 9 are foreseen at 825K.
USD/JPY is trading within familiar levels, although bears have better chances.

Financial markets are in risk-off mode, and the American currency is the most benefited from the dismal sentiment, rising against all of its major rivals. Gains against other safe-havens, however, is limited, with USD/JPY trading in the 105.30 price zone. The immediate catalyst for the latest bout of risk aversion was news coming from the US, as leaders are unable to agree on a coronavirus stimulus package, and it seems an agreement would not be reached before the presidential election.

But that’s not the only factor. Multiple European countries are seeing a steep increase in the number of new coronavirus cases, resulting in fresh localized lockdowns and curfews. Most leaders are trying to avoid total lockdowns, but the risk of paring all economic activities for a couple of weeks has increased.

Regarding macroeconomic data, Japan didn’t offer figures of interest. The US, on the other hand, will publish regional manufacturing indexes, and Initial Jobless Claims for the week ended October 9, foreseen at 825K.

USD/JPY short-term technical outlook

The USD/JPY pair is still at risk of falling, according to intraday technical readings. The 4-hour chart shows that technical indicators remain within negative levels, unable to surpass their midlines, and now slowly turning south. The 20 SMA caps advances, maintaining its bearish slope below the larger ones. The pair has limited chances of leaving its recent range, yet the risk is higher to the downside, with a break below 105.00 probably anticipating a steeper decline.

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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