USD/JPY Video 13.08.20.
U.S. Dollar Pulls Back
USD/JPY is trying to pull back after the recent upside move but stays above the 50 EMA at 106.60.
The U.S. Dollar Index has recently tried to get to the test of the 93 level but received some support near 93.10. The American currency continues to suffer from uncertainty regarding the next U.S. coronavirus aid package.
At this point, negotiations between U.S. Republicans and Democrats have stalled and it is not clear whether consensus will be reached anytime soon.
Usually, such uncertainty would have provided significant support to the Japanese yen but the recent increase in U.S. bond yields served as a positive catalyst for the U.S. dollar.
Today, the U.S. bond yields are falling back but it remains to be seen whether yields are ready to continue the previous downside trend.
Japan has recently provided producer prices data for July. On a month-over-month basis, producer prices increased by 0.6% compared to analyst consensus which called for an increase of 0.3%. Year-over-year, producer prices declined by 0.9% while analysts expected a bigger decline of 1.1%.
USD/JPY is trying to settle below the nearest support level at the 50 EMA at 106.60. In case USD/JPY manages to get below the 50 EMA, it will likely gain more downside momentum and head towards the next support level at the 20 EMA at 106.20.
A move below the 20 EMA will mark the end of the current upside momentum, and USD/JPY will try to establish a new downside trend.
On the upside, the first resistance level for USD/JPY is located at the recent highs at 107.00. If USD/JPY gets above this level, it will head towards the massive resistance area between 107.30 and 107.50.
This resistance area has been tested many times in July. At that time, USD/JPY failed to gain more upside momentum and started a downside move which took it closer to 104.00 before it was able to rebound to 107.00.
Given the strength of the 107.30 – 107.50 resistance area, USD/JPY will need strong upside catalysts to continue the rebound.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire