Sep 16, 2020, 9:27:18 AM

USD/JPY: USD remains under pressure

Current trend

USD declines against JPY during today's Asian trading session, developing an ultra-short term downtrend that formed earlier this week. The pair is losing about 0.1% and testing the level of 105.25, the lowest since August 28, for a breakdown.

The positions of USD remain vulnerable before today's publication of the final minutes of the Fed meeting, while JPY is receiving timid support from macroeconomic publications from Japan. Today's data showed improved Exports in Japan. In August, export volumes fell by 14.8% YoY, recovering slightly from the previous decline of 19.2% YoY. Imports for the same period fell by 20.8% YoY after a decline of 22.3% YoY last month. Improved export dynamics led to an increase in Japan's Trade Balance in August from JPY 10.9B to JPY 248.3B.

Support and resistance

Bollinger Bands in D1 chart demonstrate an unsteady decrease. The price range is expanding; however, it fails to catch the surge of the "bearish" sentiment at the moment. MACD is going down keeping a fairly stable sell signal (located below the signal line). Stochastic retains steady downward direction but is located in close proximity to its lows, which indicates the risks of oversold USD in the ultra-short term.

Existing short positions should be kept until the situation clears up.

Resistance levels: 105.43, 105.67, 106.00, 106.20.

Support levels: 105.19, 105.00, 104.75.

Trading tips

To open long positions, one can rely on the rebound from the support level of 105.19 with the subsequent breakout of 105.43. Take-profit – 106.00. Stop-loss – 105.00. Implementation time: 2-3 days.

The breakdown of 105.19 may serve as a signal to new sales with the target at 104.75. Stop-loss – 105.43. Implementation time: 1-2 days.