USDJPY week 37-38

The unemployment rate in Japan edged up to 2.9 percent in July 2020 compared to 2.8 percent in the prior month and market expectations of 3 percent. It was still the highest jobless rate since May 2017 and is higher than the 2.2 percent in the same month of the previous month. The number of unemployed increased by percent to 1.96 million while employment edged up 0.2 percent to 66.48 million. The jobs-to-applicants ratio slumped to 1.08 in July from 1.11 in June, marking the lowest reading since April 2014.

Consumer prices in the United States increased 0.4 percent month-over-month in August of 2020, following a 0.6 percent rise in July and beating market forecasts of 0.3 percent. The cost for used cars and trucks increased 5.4 percent, the most since March 1969, and made the largest upward contribution. Prices also increased for gasoline (2 percent), shelter (0.1 percent), recreation (0.7 percent), and household furnishings and operations (0.9 percent), the largest monthly increase since February 1991. The food index rose 0.1 percent after falling in July as an increase in the food away from home index more than offset a slight decline in the food at home index. On the other hand, prices for education went down 0.3 percent, the first fall ever, as many schools transitioned to remote learning because of the pandemic. Excluding food and energy, prices went up 0.4 percent.

USD/JPY continues to trade in a range between the 20 EMA at 106.10 and the 50 EMA at 106.30. The range is getting tighter day by day so USD/JPY will soon break out of this range.

In case USD/JPY manages to settle above the 50 EMA at 106.30, it will head towards the material resistance level at 107.00. The resistance at 107.00 is set to be a very strong level for USD/JPY so it will need significant upside catalysts to move above this level.

On the support side, a move below the 20 EMA at 106.10 will open the way to the test of the next important support level at 105.30.

From a big picture point of view, USD/JPY has been trading in a wide range between the support at 105.30 and the resistance at 107.00 since early August, and it will need material catalysts to get out of this range.

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