Bottom line: USDJPY medium term outlook remains bullish against 101.18 lows in March 2020. Furthermore, the currency has managed to carve a higher low around 104.00 levels over the last week. Bulls might be inclined to remain in control from here on.

 Fundamental Outlook:

NZDUSD has managed to regain some lost ground and trades around 0.6630/40 levels as we prepare to publish today’s update. The exchange rate had dropped through 0.6500 mark over the last week alongside risk assets and global equity markets. Risk aversion might return soon as investor psychology remains fragile.

USDJPY has managed to push higher towards 105.80 levels this week before finding some selling pressure. The anti-risk Japanese Yen lost some ground since the exchange rate had dropped through 104.00 lows over the last week. GBPJPY has also raised through 136.60 highs after having dropped through 133.00 handle.

SPX500 continued to push higher and managed to tough 3395 highs yesterday. Global indices including Dow Jones (+0.73%) and NASDAQ (+0.33) managed to close higher yesterday. It would be interesting to see how long the optimism continues through risk assets including Gold, Silver and Oil.

Technical Analysis:

USDJPY had managed to hit 105.80 levels this week, after reversing from 104.00 lows carved on September 21, 2020. Intraday support might be seen towards 105.00/20 levels, as bulls remain poised to be back in control. Watch out for a push through intermediary resistance seen around 107.00/50.

USDJPY had carved a meaningful bullish boundary between 101.18 and 111.75 levels in March 2020. The currency managed to drop towards 104.00 before finding some support. Please note that fibonacci 0.618 of the above rally is seen around 105.20 levels respectively.

High probability remains for a bullish turn after USDJPY found support just below 105.20 levels. Also note that bears managed to test the previous swing lows at 104.20 by a few pips. A break above 107.00/50 from here would confirm a bullish trend reversal.

Most traders might remain poised to hold long positions initiated close to 104.00 mark, with protective stops below 104.00 and projected target towards 107.00/50, 109.85 and higher respectively. A break below 104.00 might change the structure over the short term.

Prepared by

Harsh Japee, Technical Analyst.

USDJPY Chart

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