This week started with the Asian market seeing early selling of the dollar. Previously, the ‘Trump Rally’ led to rising U.S. long-term interest rates and stronger demand for the dollar, but with the presidential election just a day away, adjustments to positions have led to early selling of the dollar overall.
In Tokyo, which is closed for the holiday, USD/JPY dropped from last week’s close of 153.10 yen to 151.60 yen. It then bounced back to 152.28 yen, but faced resistance and fell back to 151.54 yen. This level is supported by both the 200-day moving average and the 38.2% Fibonacci retracement, which is a strong support level and helped stop the decline.
We believe current USD/JPY positions have become much lighter, making them more sensitive to today’s ISM Non-Manufacturing Index results and updates from the U.S. election. Movements are likely to stay short-term in anticipation of the upcoming FOMC meeting this weekend.
USD/JPY Expected Range: 152.50 – 151.50
Note: This forecast does not guarantee profits. Please make your own decisions before trading.