USD/JPY Forecast: Under mild pressure as the dollar eases

Valeria Bednarik FXStreet

USD/JPY Current price: 105.36

A better market mood is playing against the greenback at the beginning of the week.
Japan’s trade surplus surged to ¥675 B in September, missing the market’s expectations.
USD/JPY is neutral in the near-term, needs to leave the 105.00/80 range.

The USD/JPY pair trades lower in range this Monday, as a better market mood plays against the greenback, but also means absent demand for the Japanese currency. Speculative interest continues to focus on a US stimulus package, and other pandemic developments. US President Donald Trump has expressed its willingness for a larger stimulus package, although he still has to convince hard-line Republicans. Meanwhile, House Speaker Nancy Pelosi set a 48-hour deadline for US stimulus talks in a last-ditch effort to clinch a deal before the election.

Japan published during Asian trading hours the September Merchandise Trade Balance Total, which posted a surplus ¥675 B, below the expected ¥989.8 B but above the previous ¥248.6 B. Imports decreased by 17.2%, while exports were down by 4.9%. Also, China published the Q3 Gross Domestic Product. The report showed a 4.9% growth in the three months to September, below the 5.2% expected but better than the previous 3.2% Industrial Production and Retail Sales in the country improved by more than anticipated. The US won’t publish relevant data, but Fed’s Chair Jerome Powell is due to offer a speech.

USD/JPY short-term technical outlook

The USD/JPY pair is neutral in the short-term, as it has been hovering around 105.40 for over two weeks. In the 4-hour chart, it’s above the 20 SMA but below the larger ones, which converge around 105.55. Technical indicators, in the meantime, head nowhere around their midlines. The range is defined by 105.00 to the downside and 105.80 to the upside. The pair needs to clear one of those two levels to return to life.

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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