Aayush Jindal
Key Highlights
- USD/JPY traded above 105.00, but struggled near 105.70.
- NZD/USD rallied to a new multi-month high above 0.6900.
- EUR/USD managed to stay above the 1.1750 support level, while GBP/USD extended its decline.
- The Euro Zone Gross Domestic Product (to be released today) could grow 12.7% in Q3 2020 (Prelim) (QoQ).
USD/JPY Technical Analysis
The US Dollar started a strong upward move from the 103.18 swing low against the Japanese Yen. USD/JPY broke the 104.00 and 104.50 resistance levels to move into a positive zone.
Looking at the 4-hours chart, the pair even settled above the 104.80 resistance, the 100 simple moving average (red, 4-hours) and the 200 simple moving average (green, 4-hours).
Finally, there was a break above the 105.00 level, but the pair struggled to clear the 105.70 resistance. It seems like there is a connecting trend line forming with resistance near 105.70 on the same chart. To continue higher, the pair must break the 105.70 and 106.00 resistance levels in the near term.
On the downside, the 105.00 level is a decent support. The next major support is near the 104.70 level and the 100 simple moving average (red, 4-hours).
The 50% Fib retracement level of the recent upward move from the 103.18 low to 105.67 high is also near the 104.72 level to provide support. Any further losses may perhaps lead the pair towards the 104.10 support level.
Fundamentally, the US Consumer Price Index for Oct 2020 was released yesterday by the US Bureau of Labor Statistics. The market was looking for a rise of 1.3% in the CPI, compared with the same month a year ago.
The actual result was below the market forecast, as the US Consumer Price Index increased 1.2% (YoY), down from the last reading of 1.4%.
The report added:
The index for all items less food and energy was unchanged in October following an increase of 0.2 percent in September. The index for shelter increased 0.1 percent in October, which was offset by a 0.4-percent decrease in the index for medical care.
Overall, the US Dollar seems to be trading nicely versus the Japanese Yen as long as it is above 104.70. Looking at EUR/USD, the pair stayed above the 1.1750 support after the release, while GBP/USD extended its decline below 1.3150. More importantly, NZD/USD seems to be following a strong bullish path and it recently rallied to a new multi-month high above 0.6900.
Upcoming Economic Releases
- Euro Zone Gross Domestic Product Q3 2020 (Prelim) (QoQ) – Forecast 12.7%, versus 12.7% previous.
- US Producer Price Index Oct 2020 (MoM) – Forecast +0.2%, versus +0.4% previous.
- US Producer Price Index Oct 2020 (YoY) – Forecast +0.4%, versus +0.4% previous.
