USD/JPY Daily Forecast – Resistance At The 50 EMA Stays Strong

U.S. Dollar Failed To Gain More Upside Momentum

USD/JPY returned back to the trading range between the 20 EMA at 106.10 and the 50 EMA at 106.25 and tested the high end of this range.

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, moved closer to the nearest support at the 20 EMA at 93.05 amid signs that U.S. coronavirus aid bill negotiations have once again stalled.

On Tuesday, U.S. Republicans offered a bill worth $300 billion, which was much smaller than the original $1 trillion plan. Democrats wanted to provide aid of more than $3 trillion but signaled that they were ready to scale it down to $2.2 trillion.

Both sides remain very far apart, and negotiations will get harder as elections draw closer. The absence of new U.S. economic stimulus is a negative factor for the U.S. dollar and USD/JPY.

Today, Japan provided Machinery Orders report for July. On a year-over-year basis, Machinery Orders declined by 16.2% compared to analyst consensus which called for a decline of 18.3%.

On a month-over-month basis, Machinery Orders increased by 6.3% compared to analyst consensus of 1.9%. Better-than-expected Machinery Orders are a rare bright spot in Japan’s economic data.

U.S. will soon provide Initial Jobless Claims and Continuing Jobless Claims reports which may have a significant impact on USD/JPY trading dynamics today. Initial Jobless Claims report is projected to show that 846,000 Americans filed for unemployment benefits in a week. Continuing Jobless Claims are expected to decline from 13.25 million to 12.93 million.

Technical Analysis

USD/JPY failed to gain more momentum and remains range-bound.

In case USD/JPY is able to settle above the nearest resistance level at the 50 EMA at 106.25, it will gain more upside momentum and head towards the next significant resistance level at 107.00.

On the support side, a move below the nearest support level at the 20 EMA at 106.10 will open the way to the test of the next material support level at 105.30.

The current trading range is very tight so USD/JPY will soon make another attempt to gain more momentum. #USD/JPY##FX#

Reprinted from FXEmpire，the copyright all reserved by the original author.