USD/JPY: The latest advance seems corrective

USD/JPY is recovering some ground after printing a fresh October low of 104.33 on Wednesday, trading in the 104.70 price zone. The pair is correcting oversold conditions but bears still lead, Valeria Bednarik, Chief Analyst at FXStreet, reports. 

Key quotes

“The dollar reached oversold conditions against multiple rivals as investors struggle to make something out of US stimulus talks. The White House and Democrats appear to be edging towards an agreement, although hard-line Republicans oppose to a large stimulus bill. Meanwhile, the election date approaches and talks have been once again extended to continue this Thursday.”

“The American session will bring the US Initial Jobless Claims for the week ended October 16, foreseen at 860K from 898K. The country will also release September Existing Home Sales, seen increasing 5% when compared to August.”

“The 4-hour chart shows that the USD/JPY pair continues developing below all of its moving averages, and with the 20 SMA still heading south below the larger ones. Technical indicators, in the meantime, have barely corrected oversold conditions, and hold well into the red, without directional strength.” 

“A critical mid-term support level is 104.00 with a steeper decline expected once below the level.”