Bottom line: USDJPY long term structure remains bearish until prices stay below 112.22 resistance. The currency might have reached potential support zone around 105.00 levels and might produce a bullish reversal here. Traders might remain watchful now.
Fundamental Outlook:
NZDUSD had managed to reach 0.6700/05 this week before reversing lower again. The pro-risk currency exchange rate might be coming under pressure over trade developments with China in recent times. Furthermore, as Global Markets remain vulnerable for a drop most risk assets and currency pairs might come under pressure. The exchange rate trades lower around 0.6635 for now.
USDJPY exchange rate has remained lower since the past few trading sessions, touching 104.80 mark post FOMC yesterday. US Dollar has been on the receiving end against EURO, Japanese Yen and Pound Sterling among others recently. The exchange rate trades above 105.20 as we prepare to publish.
SPX500 closed around 3264 yesterday, higher by +1.34%. The Dow Jones and NASDAQ also managed to close higher by +0.70% and +1.4% respectively. With the FOMC behind us markets might take cues from the Q2 GDP figures and the decision on extending US unemployment benefits, as it expires tomorrow.
Technical Analysis:
USDJPY continued its down journey yesterday and dropped to 104.77 before pulling back. The larger trend continues to remain bearish but traders might remain vigilant over the short term as 105.00 remains potential support zone.
USDJPY had rallied from 101.00 through 111.75 during March 2020. Since then the currency has remained in control of bears and dropped all the way through 104.77 yesterday. Please note that fibonacci 0.618 retracement of the above rally is seen around 105.00 mark.
USDJPY bullish bounce from current levels remains a high probability. Immediate short term resistance is seen through 105.80 mark and a break above that might indicate that a meaningful bottom is in place around 104.77. Traders might book profits on the short positions taken earlier and be watchful.
Prepared by
Harsh Japee, Technical Analyst.
USDJPY Chart
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