Bottom line: USDJPY medium to long term outlook remains bullish against 101.18 lows. The currency has been subdued within a 200 pip trading range between 105.00 and 107.00 lately. It needs to break out of the triangle to decide its next major direction; potential remains towards 110.00.

 Fundamental Outlook:

NZDUSD has managed to pull back after hitting 0.6609 lows yesterday. The exchange rate had come under pressure as global markets reversed sharply over the last few trading sessions. Further the RBNZ would be prepared for another stimulus and negative interest rate policy, to help support the economy. NZDUSD might remain under pressure as US Dollar gains momentum over next few weeks.

USDJPY has been locked within a range between 105.50 and 107.00 in the past few trading sessions. The anti-risk Japanese Yen has managed to gain against GBP, EUR, AUD and NZD as risk aversion returned. The exchange rate might take cues from further development on a possible early elections.

SPX500 had revered sharply after hitting all-time highs at 3588 on September 02, 2020. The indice had collapsed nearly -9.0% before finding support around 3300 handle. This might be the beginning of another round of selloff, as investor sentiment remains fragile over rising US-China tensions.

Technical Analysis:

USDJPY has been drifting sideways since 125.85 highs over a longer time frame. The entire structure between 125.85 and 101.18 levels can be classified as a larger degree contracting triangle. In the next few weeks, bulls might stay in control as they are poised to push through 110.00 mark.

USDJPY had rallied through 111.75 levels in March 2020, after hitting lows around 101.18. The entire boundary was retraced to just below fibonacci 0.618 levels around 104.20. An extension of the above, could push through 110.00 and further in the next few weeks.

Most traders might be willing to initiate long positions around 105.50/80 support zone, with a protective stop below 104.20 and projected targets above 110.00. Only a break below 101.18 could change the short term structure and delay matters further.

Prepared by

Harsh Japee, Technical Analyst.

USDJPY Chart

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