Daily Market Recap - USDJPY

The USDJPY continued its slide on Tuesday as the Yen gained some respite from the recent selling momentum. Traders reacted to the increase in risk sentiment brought by upbeat Chinese, German, and US data, which resulted in added pressure on the safe have Dollar.

The move today may also be attributed to some degree of profit-taking in the pair after uncertainties over the leadership of Japan have been put aside.

On the political front, Yoshihide Suga has been confirmed as the successor of outgoing Prime Minister Shinzo Abe after an internal party vote on Monday. Suga is a long-time supporter and advocate of Abenomics and analysts are predicting a continuation in QE policies.

We will find out in tomorrows Bank of Japan monetary policy meeting whether any fresh perspectives will be brought in through the market expects a status quo for now.

Meanwhile, in the US, the Federal Reserve will conduct its FOMC meeting later this Thursday which should provide some added volatility in the USDJPY. Should there be no surprises from both the Fed or the BoJ, prices could continue to move sideways along the 106 and 105.2 channels.

From a technical perspective, he USDJPYs fall below the 105.5 marks has cemented the downtrend in the pair suggesting further consolidation with a negative bias can be expected in the short run and may continue towards the August lows of 105.200 – 105.100 before chances of a rebound.

(Chart Source: Tradingview 16.09.2020)

The bearish target will now be to cross below the 105.200 marks in view of testing the ultimate 104 handles from July lows. On the flip side, a move above the 105.896 marks will confirm the presence of buyers and a potential trend reversal. Bulls should be satisfied with any bounce towards the 105.715 marks in the near term.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.