Continuing up to today’s European session trading session, the US dollar remains to strengthen with investors ’investment options switching to safer assets over risky assets.
US economic data was also published yesterday involving both the manufacturing and services sectors. The US is expected to receive additional financial support to support the economy in the face of a pandemic crisis.
The strong strengthening of the US dollar sank the Japanese Yen which should have been seen to strengthen further due to its safe-haven currency status.
However, the strengthening of the Yen was hampered by economic instability in Japan at the moment after the change of government following the resignation of Shinzo Abe as Prime Minister.
Japanese central bank policymakers also warned that the resurgence of the Covid-19 risk could slow down economic recovery and affect the banking system.
Thus, although market sentiment risks giving an advantage to safe-haven currencies, there are obstacles for the Yen to strengthen.
It can be seen that the price movement on the chart of the USD / JPY currency pair shows a bullish pattern since the beginning of the week from a low of around 104.00.
For a 3-day consecutive rise, the price has risen weekly from around 150 pips to 105,500 at the end of yesterday's New York session.
Continuing in the Asian session this morning, the price once again tested the level of 105.00 which is the SBR (support become resistance) zone but again showed signs of decline at the beginning of the European session.
With a continuous bullish pattern, prices are expected to continue higher this week with the focus being on the 106,500 resistance zone tested in early September.
However, if a price decline occurs, monitor the previous price focus levels as at the level of 104.800 which is the RBS zone (resistance become support), the support level 104.400, and then the support zone 104.00.
