USD/JPY bids appear into deep into the bear’s lair

• USD/JPY bulls testing the bearish commitments in the critical supply area.
• Focus now turns to the US elections and the first if three debates.

USD/JPY is currently trading at 105.63 between a day’s range of 105.34 and 105.73 and higher by some 0.18%.

US equities snapped a 3-day winning streak amid coronavirus concerns which likely capped the bid in the dollar vs the yen.

There was a sober tone to risk markets ahead of the first presidential debate in the US which starts on Tuesday night at 9PM ET.

The 90-minute televised debate between the two US presidential candidates will be watched by investors looking for guidance on the candidate prospects.

The dollar has a poor track record leading up to the election day.

Meanwhile, data from the US session showed that US consumer confidence surged in September to 101.8 from 86.3 in August (+15.5 points) in the largest monthly rise in 17 years.

”The headline data is still well short of February’s print (132.6), but it is above the average of the last 20 years (91.2). Consumers seem encouraged going into the election, while low-interest rates, the hitherto jobs recovery and rising wealth for asset owners seem to be propping up the current sentiment, ” analysts at ANZ bank explained. 

Looking ahead

As the month draws to a close this week, investors will have their sights already set on the Octobers events and what may come of them.

First up, we have the US Nonfarm Payrolls data.

”Payrolls probably rose fairly strongly by pre-COVID standards, but with the pace slowing again, and the level still down around 11mn since February,” analysts at TD Securities explained.

”We are assuming a 200k decline in government payrolls, due largely to weak education hiring at the start of the school year. More positively, the initial manufacturing survey data for September point to another solid ISM reading.”

However, the Federal Reserve’s guidance is unlikely to change ahead of the US election which puts the emphasis on data releases as well as the political rhetoric.

USD/JPY levels

The 61.8% Fibonacci has not held the bulls down and the start of the week’s advance beyond resistance brings the 106 figure into play.

However, there may not be much given for the bulls that juncture, according to the weekly chart:

If the DXY U-turns in a 5th wave, then it will likely be game over for the bulls: