USD/JPY Forecast: Speculative interest keeps dumping the dollar

Valeria Bednarik FXStreet

USD/JPY Current price: 103.97

Coronavirus concerns maintain the market’s sentiment depressed.
The Japanese trade surplus surged to ¥872.9 billion in October amid plummeting imports.
USD/JPY is on its way to retesting the November low at 103.17.

The USD/JPY pair fell sub-104.00 as the dollar extends its losses against most major rivals. Headwinds related to the coronavirus pandemic hurt demand for high-yielding assets. The US continues reporting over 150K new cases per day while hospitalizations soar. The situation is just a bit better in Europe, although the Union is also navigating the second wave and is a tough one. Vaccine hopes won’t prevent an economic downturn in the ongoing quarter.

In this scenario, equities struggle to post gains while government debt yields fall. US Treasury yields are down to fresh two-week lows, while Wall Street futures struggle to trim early losses.

Japan published the October Merchandise Trade Balance at the beginning of the day, which posted a surplus of ¥872.9 billion, much better than anticipated, as imports plunged 13.3% while exports decreased a modest 0.2%. The US will release today, October Housing Starts and Building Permits for the same month.

USD/JPY short-term technical outlook

The USD/JPY pair is trading near a daily low of 103.78 and poised to extend its decline. The 4-hour chart shows that the 20 SMA has extended its slide above the current level and below the larger moving averages, maintaining a strong bearish slope. Technical indicators in the mentioned time frame, head south although with limited momentum. The immediate support level is 103.50, en route to the year low at 103.15.

Support levels: 103.50 103.15 102.80

Resistance levels: 104.00 104.30 104.75

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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