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Turmoil in the US related to economic growth and fiscal stimulus keeps the dollar under pressure as USD/JPY is trading now in the 105.40 price zone, down -0.5% on the day. The pair is approaching the 61.8% retracement of its latest bullish run at 105.25 and could speed the slump on a break this level, FXStreet’s Chief Analyst Valeria Bednarik briefs.

Key quotes

“The greenback is incapable of lifting its head after the Congress left for holidays without agreeing on a stimulus package, also undermined by concerns about economic growth. Furthermore, Treasury yields continue to give up ground, reflecting increased demand for safe-haven assets.”

“The USD/JPY pair is trading below the 50% retracement of its latest bullish run at around 105.60, where selling interest is rejecting attempts to advance.”

“In the 4-hour chart, technical indicators reached oversold levels,  partially losing their bearish strength, maintaining the risk skewed to the downside. In the mentioned time-frame, the 20 SMA accelerated south and crossed below the 200 SMA, also favoring a downward extension ahead, particularly on a break below 105.25, the 61.8% retracement of the mentioned rally and the immediate support.”