Bottom line: USDJPY medium term outlook might be turning bullish against 104.00 lows. The currency pair is trading around 105.45 mark for now and bulls might be preparing to push towards 107.50 over the next few trading sessions.

 Fundamental Outlook:

NZDUSD has been dropping since printing highs around 0.6800 on September 18, 2020. The exchange rate has erased over 275 pips and is trading around 0.6530 mark as we prepare to publish. If risk aversion continues further, the exchange rate might continue to remain under pressure.

USDJPY has bounced back after printing 104.00 lows early this week. The exchange rate has gained over 140 pips and is trading close to 105.40/45 mark as we prepare to publish. The safe haven US Dollar and anti-risk Japanese Yen have remained beneficiaries as global markets and risk assets continue to drop. The exchange rate might gain over the next several weeks.

SPX500 continued its drop further closing around 3242, down by -2.14% yesterday. The indice futures trade lower today around 3229 as we prepare to publish. Dow Jones was down -1.81%, while NASDAQ had collapsed close to -3.00% as risk aversion continues. Investors might remain cautious over the next several weeks as the safe haven US Dollar might continue its gains.

Technical Analysis:

USDJPY bulls might be poised to remain in control after the currency had dropped through 104.00 lows early this week. They have managed to produce a sharp pullback towards 105.45 mark and might be looking to push through 107.00 and 107.50 interim resistance levels.

USDJPY had earlier rallied from 101.18 through 111.75 respectively. Furthermore, the corrective drop managed to reach just below fibonacci 0.618 retracement around 105.20 levels. Bears managed to test the lows by just 20 pips at 104.00 levels before giving in to bulls.

USDJPY drop to 104.00 might have completed the wave structure that had begun since 111.75 levels in March 2020. Bulls might continue to remain in control and take out resistance at 107.50, 108.00 and higher levels until 104.00 remains intact.

Most traders might remain inclined to hold long positions initiated close to 104.00 support with protective stops just below 104.00 and projected target towards 107.50, 108.50 and further. Only a break below 104.00 would change the above bullish structure.

Prepared by

Harsh Japee, Technical Analyst.

USDJPY Chart

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