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

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

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.

EUR/USD holds firm above 1.1900 as US NFP looms

EUR/USD holds its upbeat momentum above 1.1900 in the European trading hours on Wednesday, helped by a broadly weaker US Dollar. Markets could turn cautious later in the day as the delayed US employment report for January will takes center stage.

GBP/USD recovers losses despite rising UK political risks, BoE rate cut bets

Pound Sterling advances against the US Dollar after registering modest losses in the previous session, trading around 1.3650 during the Asian hours on Wednesday. The pair could extend losses as the Pound Sterling faces pressure from rising political risks in the UK and growing expectations of near-term Bank of England rate cuts.

Gold sticks to gains near $5,050 as focus shifts to US NFP

Gold holds moderate gains near the $5,050 level in the European session on Wednesday, reversing a part of the previous day's modest losses amid dovish US Federal Reserve-inspired US Dollar weakness. This, in turn, is seen as a key factor acting as a tailwind for the non-yielding yellow metal ahead of the critical US NFP release.

US Nonfarm Payrolls expected to show modest job gains in January

The United States Bureau of Labor Statistics will release the delayed Nonfarm Payrolls data for January on Wednesday at 13:30 GMT. Investors expect NFP to rise by 70K following the 50K increase recorded in December.

Dollar drops and stocks rally: The week of reckoning for US economic data

Following a sizeable move lower in US technology Stocks last week, we have witnessed a meaningful recovery unfold. The USD Index is in a concerning position; the monthly price continues to hold the south channel support.

BNB prolonged correction signals deeper bearish momentum

BNB (BNB), formerly known as Binance Coin, is trading below $618 on Wednesday, marking the sixth consecutive day of correction since the weekend. The bearish price action is further supported by rising short bets alongside negative funding rates in the derivatives market.