Currency Analyst since 2010

USD/JPY: outlook for October 17-21

USD/JPY tested the highest levels since the end of July.

All in all, US dollar rose because of its general strength on increased expectations that the Federal Reserve will raise interest rates in December. The pair did NOT have any significant drivers from Japan. The powers of USD bulls were limited versus the yen as the weaker trade data from China once again sparked concerns about global economic growth.

Next week data from Japan will be once again of low importance. Instead focus on the US figures, as well as release of China’s GDP statistics on Wednesday. Lower data will once again increase demand for the yen as a safe haven, while better data will give more fuel to USD/JPY bulls.

USD/JPY managed to climb above 100-day MA and the daily Ichimoku Cloud, which are now proving in with support in the 103.45/30 area ahead of the week’s low at 102.80. At the same time, the pair approached resistance zone at 104.85 of the slightly slow upward channel, which has been in place since the middle of August. There’s also a psychologically important level of 105 nearby. This obstacle won’t be very ease for the bulls to break. Such a move requires a new driving force, and we remember that Japan does not offer bullish drivers for USD/JPY. Still, if the bulls managed to push above the mentioned resistance, new upside targets will be at 105.70 and 107.25.

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