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Aayush Jindal

Key Highlights

  • USD/JPY started a decent recovery from the 104.00 support.
  • It is approaching a crucial bearish trend line with resistance near 105.75 on the 4-hours chart.
  • The US Initial Jobless Claims in the week ending Sep 18, 2020 increased from 866K to 870K.
  • The US Durable Goods Orders could increase 1.5% in August 2020, down from the last +11.4%.

USD/JPY Technical Analysis

This past week, the US Dollar saw a steady decline below 105.00 against the Japanese Yen. USD/JPY found support near 104.00, and it is currently recovering higher towards important barriers.

Looking at the 4-hours chart, the pair recovered above the 104.50 and 105.00 resistance levels. There was also a break above the 50% Fib retracement level of the key decline from the 106.30 high to 104.00 low.

The pair is now approaching a crucial resistance near the 105.75 level. There is also a major bearish trend line with resistance near the 105.75 level and the 200 simple moving average (green, 4-hours). It is close to the 76.4% Fib retracement level of the key decline from the 106.30 high to 104.00 low.

The 100 simple moving average (red, 4-hours) is also near the 105.60 level. A clear break above the 105.75 resistance could open the doors for a larger upward move. The next major resistance is near the 106.40 level.

Conversely, the pair could fail to continue higher above 105.75 and the 200 SMA. An initial support is near the 105.00 level. If there is a downside break below 105.00 and 104.80, the pair could start a fresh decline towards 104.00.

Fundamentally, the US Initial Jobless Claims figure for the week ending Sep 18, 2020 was released yesterday by the US Department of Labor. The market was looking for a drop from 860K to 843K.

However, the actual result was disappointing, as the US Initial Jobless Claims increased to 870K. The last reading was also revised up from 860K to 866K.

The report added:

The 4-week moving average was 878,250, a decrease of 35,250 from the previous week's revised average. The previous week's average was revised up by 1,500 from 912,000 to 913,500.

Overall, USD/JPY must surpass 105.75 to continue higher. Looking at EUR/USD, the pair declined further below 1.1700. Besides, GBP/USD seems to be consolidating above the 1.2700 support zone.

Upcoming Economic Releases

  • US Durable Goods Orders August 2020 – Forecast +1.5% versus +11.4% previous.
  • US Durable Goods Orders ex Transportation August 2020 – Forecast +1.2% versus +2.6% previous.