USD/JPY Current price: 104.16
- Concerns about global growth and new lockdowns in Europe spur demand for safety.
- The macroeconomic calendar will be quite light this week, exacerbating sentiment-related trading.
- USD/JPY is technically oversold, but there are no signs of a bottom just yet.
The American dollar started the day with a soft tone, but that change after London’s opening. European equities are sharply down, spurring demand for safe-haven assets, the greenback included. In the case of the USD/JPY pair, the Japanese currency takes the lead, with the pair trading at its lowest since last March near the 104.00 level.
Concerns about global growth fueled by raising coronavirus cases in Europe and new localized lockdowns announced are behind the dismal market mood. According to Sunday figures, the continent reported roughly 40,000 new daily coronavirus cases, officially in the middle of a second wave.
In the data front, Japanese markets were closed amid a local holiday. The US session will bring the August Chicago Fed National Activity Index, foreseen at 1.95 from 1.18 in July. Also, several FOMC members will speak today, including chair Powell, although he is not due to referring to monetary policy.
USD/JPY short-term technical outlook
The USD/JPY pair trades in the 104.10 price zone, modestly recovering from a daily low of 103.99. The 4-hour chart shows that technical indicators have pared their declines but stand within oversold readings. A firmly bearish 20 SMA remains above the current level and below the larger ones, which also gain bearish strength. The pair may correct oversold conditions but would need to extend its recovery above 104.50 to shrug off its bearish strength, quite unlikely at the time being.
Support levels: 104.00 103.65 103.20
Resistance levels: 104.50 104.90 105.35
View Live Chart for the USD/JPY
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