Bottom line: USDJPY might have turned bullish against 104.20 over the near term. The currency should be aiming to print above 108.00 resistance as bulls looking poised to remain in control. Probabilities remain for a push through 111.75 mark as well.

 Fundamental Outlook:

NZDUSD has been under pressure since hitting highs at 0.6715 levels on July 31, 2020. The exchange rate is trading below 0.6600 for now and could continue drifting towards 0.6200/30 at least. The risk associated NZDUSD might take cues from risk assets and global indices over the next few weeks.

Adding further pressure was the Reserve Bank of New Zealand dovish stance yesterday and keeping interest rates low at 0.25%. The RBNZ might be prepared for a negative interest rates policy and more stimulus if required.

SPX500 continues its rally yesterday by +1.40%, managing to close at 3380, just a few points away from all-time highs. The optimism surprisingly continues amidst geopolitical tensions between US-China on the rise. Further, US job markets looking gloomy with no consensus on the new stimulus package yet.

Technical Analysis:

USDJPY bulls might remain in control until prices stay above 104.20 levels in the near term. The currency trades around 106.70 levels as we prepare to publish, and might resume higher towards 108.00 levels in the next leg. Bottom line remains that it should hold above 104.20 levels.

USDJPY had rallied through 111.75 levels in March 2020. The subsequent drop had found support just below the fibonacci 0.618 retracement seen around 105.20 levels. High probability remains for bulls to remain in control and attempt to push through 111.75 over the next few weeks.

Most traders might have initiated long positions around 104.50/105.00 levels with protective stops just below 104.20 and projected targets towards 108.00 and 111.75 respectively. Only a consistent break below 104.20 would change the above intermediary bullish structure.

Prepared by

Harsh Japee, Technical Analyst.

USDJPY Chart

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