USD/JPY is currently trying to settle above the 20 EMA at 105.40 as the U.S. dollar is mostly flat against a broad basket of currencies.
The U.S. Dollar Index made an attempt to get to the test of the significant resistance level at 94.65 but faced resistance at 94.50 and pulled back. If the U.S. Dollar Index moves above 94.65, USD/JPY will continue its rebound.
Today, traders will focus on U.S. Initial Jobless Claims and Continuing Jobless Claims reports. Initial Jobless Claims are projected to decline from 860,000 to 840,000 while Continuing Jobless Claims are expected to fall from 12.63 million to 12.3 million.
At this point, analysts expect to see little progress on the job front. If the reports are worse than expected, the U.S. dollar may start to lose ground against the yen.
Currently, fears of the second wave of lockdowns in Europe and poor economic progress in Japan led to a rebound of USD/JPY. However, it remains to be seen whether the current rebound will be sustainable as the yen continues to serve as a safe haven currency and traders may start to sell USD/JPY on first signs that the U.S. economic recovery is not as robust as expected.
USD/JPY is currently trying to continue its rebound. To do this, USD/JPY must settle above the nearest resistance level at the 20 EMA at 105.40.
If USD/JPY manages to get above the 20 EMA, it will gain more upside momentum and head towards the next significant resistance level at the 50 EMA at 105.85.
In case USD/JPY moves above the 50 EMA, it will head towards the major resistance level at 106.30.
On the support side, the nearest support level for USD/JPY is located at 104.90. A move below this level will open the way to the test of the next support level at 104.70.
Reprinted from FXEmpire, the copyright all reserved by the original author.