USDJPY Signs of Recovery, Support at 107
The USD to JPY (USDJPY) is little changed today as traders reflect on US stimulus and weak economic data from Japan. The pair is trading at 105.9, which is slightly above yesterday’s low of 105.80.
The biggest driver for the USD to JPY price is the stimulus stalemate in the United States. In recent weeks, Democrats and Republicans have struggled to reach an agreement on how to support the economy. Democrats have proposed a package worth more than $2.2 trillion while the White House has proposed spending more than $1.5 trillion.
Sadly, the impact for the lack of a stimulus is visible in the economy. For example, the nonfarm payroll numbers released last week missed what analysts were expecting. And yesterday, numbers showed that the number of Americans filing for jobless claims remains at a stubbornly level of above 840,000. That is substantially higher than the pre-Covid-19 average of about 200k.
Meanwhile, the USDJPY is reacting to Japanese wages and household spending data. In August, average household spending rose by 1.7%, which was a better performance than the previous month’s decline of 6.5%. The spending is 6.9% below the same period a year ago. The overtime pay, which is an important number that measures the strength of an economy declined by 1.3%.
The USD to JPY pair has found strong resistance after it reached the 106.00 level. As a result, it is between the 15-day and 25-day exponential moving averages while oscillators are relatively neutral. Also, the price remains above the important support at 105.80. Therefore, I suspect that the pair will remain at the range of the resistance at 106.6 and the support at 105.80. This thought is also shared by analysts at UOB, who have placed the lower support at 105.70.
