USD/JPY Daily Forecast – Resistance At 107.00 Stays Strong
USD/JPY Video 14.08.20.
Yen Tries To Gain More Support
USD/JPY remains in the range between the support level at the 50 EMA at 106.60 and the nearest resistance level at 107.00 as the U.S. dollar is flat against a broad basket of currencies.
The U.S. Dollar Index is currently trying to gain more upside momentum but remains stuck near 93.20. In case U.S. Dollar Index manages to rise closer to the next resistance level at 93.50, USD/JPY will have more chances to get above the resistance at 107.00.
On Monday, Japan is set to provide its preliminary GDP Growth Rate numbers for the second quarter, so traders may be positioning themselves ahead of this release.
Japan’s GDP is projected to decline by 7.6% on a quarter-over-quarter basis. The picture is set to look truly horrific on a year-over-year basis since Japan’s GDP is expected to shrink by as much as 27.2%.
In addition to the new GDP Growth Rate report, Japan is also set to publish Industrial Production data for June. The report is expected to show that Industrial Production increased by 2.7% month-over-month but was still down by 17.7% on a year-over-year basis.
For the U.S. dollar, the key driver is the continued uncertainty regarding the next round of the U.S. stimulus. In recent days, there were no indications that Republicans and Democrats were willing to continue negotiations.
Technical Analysis
USD/JPY has once again tested the resistance level at 107.00 but did not manage to gain sufficient upside momentum and declined closer to the nearest support level at the 50 EMA at 106.60.
As a result, USD/JPY remains range-bound between 106.60 and 107.00. A move out of this range will likely lead to increased momentum.
In case USD/JPY manages to settle above 107.00, it will head towards the test of the major resistance area at 107.30 – 107.50. This resistance level is very strong so USD/JPY will need decisive upside catalysts to settle above it.
On the support side, a move below the support at 106.60 will open the way to the test of the next support level at the 20 EMA at 106.30.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
