USD/JPY Forecast: At the top of its latest range on market’s optimism

Valeria Bednarik FXStreet

USD/JPY Current price: 105.63

Japanese services output improved in September but remained in negative territory.
Speculation that US President Trump is recovering from COVID-19 is boosting the mood.
USD/JPY needs to break above last week high at 105.80 to turn bullish in the short-term.

The market’s mood improved after a bumpy weekend, with the sentiment gyrating around US President Trump’s health. The leader of the world’s largest economy contracted COVID-19 last Friday and was later translated to a medical facility. Contradictory headlines throughout the weekend spurred concerns, although, at this point, news suggest that he is recovering. Equities are firmly up, as well as US Treasury yields, pushing USD/JPY higher.

Japan published the September Jibun Bank Services PMI which beat expectations but held within contraction levels, printing at 46.9. The US session will bring the final version of the US Markit Services PMI, foreseen unchanged at 54.6. The country will also publish the official ISM Services PMI, expected at 56.3 from the previous 56.9.

USD/JPY short-term technical outlook

The USD/JPY pair is trading at the upper end of its previous week´s range in the 105.60 price zone. The 4-hour chart shows that it continues to develop between moving averages, with a directionless 200 SMA capping advances currently at 105.70. Technical indicators crossed their midlines into positive levels, but lack clear directional strength. The pair traded as high as 105.80 last week, the level to surpass to confirm additional gains ahead.

Support levels: 105.20 104.85 104.50

Resistance levels: 105.80 106.25 106.60

View Live Chart for the USD/JPY

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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