Bottom line: USDJPY medium term structure might have turned bullish against 104.00 recent lows print on September 21, 2020. Bulls have managed to push through 106.00 intermediary highs as they remain poised to take out immediate resistance around 107.00 levels respectively.

 Fundamental Outlook:

USDJPY has raised through 106.10 handle yesterday before finding some selling pressure. The anti-risk Japanese Yen has lost some ground as global equity markets rallied after US President Donald Trump’s tweet on the US stimulus package. The talks might only resume after the much hyped US Presidential elections, he had advised earlier, followed by a counter tweet. The exchange rate might face some selling pressure around 107.00 handle.

Technical Analysis:

USDJPY bulls are looking in control for now as they have managed to push through 106.00 handle. The currency might have carved a meaningful higher low around 104.00 mark as bulls might remain poised to push through 109.85 levels over the next several weeks.

USDJPY had dropped through 101.18 lows in March 2020, before reversing sharply. Bulls had managed to push towards 111.75 carving a meaningful bullish boundary to be worked upon. Further, the subsequent drop from 111.75 through 104.00 seems corrective.

Also note that USDJPY had dropped marginally below fibonacci 0.618 retracement of the above rally towards 104.00 before bouncing back. Ideally, prices should hold above 104.00 and push through 107.00, 109.85 and higher levels respectively.

Looking at the recent rally between 104.00 through 106.00 levels, USDJPY might produce a corrective drop in the short term towards 105.50 levels, before turning higher again. Bulls might remain in control going forward, and prices might hold above 104.00.

Most traders might be prepared to hold long positions initiated around 104.00 mark and also add more towards 105.50, with protective stops below 104.00 and target potential through 107.00, 109.85 and higher respectively.

Prepared by

Harsh Japee, Technical Analyst.

USDJPY Chart

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