Bottom line: USDJPY medium to long term structure continues to remain bullish against 101.18 lows in March 2020. Further, it has managed to carve a higher low around 104.20 levels recently as bulls might be inclined to push towards 109.85, 111.00 and further.

 Fundamental Outlook:

NZDUSD has managed to hit 0.6790, an eight month high. The risk associated currency pair has been mostly backed by global indices as they continued to rally. The dovish stand by Reserve Bank of New Zealand (RBNZ) had no impact as the exchange rate managed to register new highs against Greenback. Further easing of COVID-19 restrictions may add fuel to the exchange rate.

USDJPY has managed to rally since the beginning of this week and closed higher around 106.17 yesterday. The exchange rate has come under pressure since Prime Minister Abe’s resignation over the last week, citing health issues. The anti-risk Japanese Yen might be under pressure as global equity markets continue to inch higher.

SPX500 managed to print fresh all-time highs around 3588 yesterday. Global equity markets continue to push higher with Dow Jones up +1.59%, DAX higher by +2.07%, FTSE up +1.69%. Asian markets follow as Nikkei is up by +1.35% as we prepare to publish. September is considered to be historically volatile and it would be interesting to see price action unfold further.

Technical Analysis:

USDJPY might be preparing to push through 111.70 levels over the next several weeks. The currency has carved a higher low around 104.20 mark on July 31, 2020. Bulls are expected to remain in control as long as prices stay above 104.20 in the near term. Potential direction might be higher from here.

USDJPY had dropped through 101.18 lows in March 2020 as it continues to consolidate on the weekly chart. The subsequent rally towards 111.75 might have set the stage for further upside. Also note that the drop thereafter, had stalled around 104.20 levels and was corrective in nature.

The fibonacci 0.618 retracement of rally between 101.18 and 111.75 was seen passing through 105.20 levels. A bullish bounce from 104.20 might have added further confidence towards higher levels. Most traders might be preparing to hold longs against 104.20 interim support.

Prepared by

Harsh Japee, Technical Analyst.

USDJPY Chart

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