U.S. Dollar Is Losing Some Ground Against Yen
USD/JPY tried to settle below the nearest support at the 50 EMA at 105.80 while the U.S. dollar remained under pressure against a broad basket of currencies.
The U.S. Dollar Index is moving towards the support at 93.35 as traders increase their purchases of riskier assets on signs that U.S. lawmakers are closer to the deal on the $25 billion aid for airlines.
However, there’s still plenty of uncertainty, and USD/JPY trading is volatile since both the U.S. dollar and the Japanese yen serve as safe haven assets.
Today, Japan reported that Household Spending declined by 6.9% year-over-year in August, fully in line with the analyst consensus. On a month-over-month basis, Household Spending increased by 1.7% while analysts projected that it would increase by 3.2%.
Household Spending remains under pressure due to consumer anxiety about the coronavirus pandemic and its impact on job security. In addition, Average Cash Earnings in Japan declined by 1.3% year-over-year which put more pressure on consumers’ desire to spend money.
The recent data from Japan indicated that the country’s economy is not out of the woods yet, but it remains to be seen whether the Bank of Japan will manage to find additional measures to support the economy.
Technical Analysis
USD/JPY is currently trying to get back above 106.00 in order to test the nearest resistance level at 106.10. This resistance has already been tested several times in recent trading sessions and proved its strength.
In case USD/JPY manages to settle above the resistance at 106.10, it will gain more upside momentum and head towards the major resistance level at 106.30.
A move above 106.30 will provide USD/JPY with an opportunity to test the next resistance level at 106.55.
On the support side, the nearest support level for USD/JPY is located at the 50 EMA at 105.80. This support level has been tested during the current trading session, and USD/JPY quickly rebounded closer to 106.00.
In case USD/JPY declines below 105.80, it will test the major support level at 105.70. A move below 105.70 will open the way to the test of the next support level at 105.40. #USD/JPY##FX#
Reprinted from Fxempire，the copyright all reserved by the original author.
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