USDJPY Potential Double Bottom Points to A Move Back to 109

The USDJPY pair tries a bullish reversal after failing at the 104 area. So far, it looks like the market formed a double bottom in that area and a confirmation points to a bounce all the way to 109.

The USDJPY pair is one of the pairs that traded in tight ranges this 2020. Because central banks in the developed world lowered the interest rates to the zero level, the Bank of Japan is not the only game in town anymore when it comes to aggressive easing. Therefore, the JPY lost its safe-haven status, and it decoupled from the risk-off/risk-on market moves.

All Eyes on the First Presidential Debate

Despite the JPY decoupling from the traditional correlations, the USDJPY pair is likely to react to what happens in the United States this week. The first presidential debate out of three such debates is scheduled this week.

Four years ago, the USDJPY reacted the most to the news that Donald Trump won the White House. The pair advanced from the 100 area to 118, in an almost vertical move in the months that followed the election.

In the meantime, it gave back most of its gains. But the election ahead seems as tight as the one four years ago and could trigger a similar reaction on the USDJPY pair.

This week’s first presidential debate will tell us how sensible the USDJPY pair is to the election. On Wednesday, the market finds out for the first time what is priced in as the two candidates meet for the first time ahead of the November 3rd election day.

USDJPY Technical Analysis

Bulls have a strong interest in the USDJPY breaking the falling trendline. A push above 106.50 may signal the double bottom is in place, and bulls will try for the measured move.

If that is the case, bulls should consider placing a stop-loss order at 115 and a take profit at 109.50. For more about how to trade the currency market, consider our Forex trading course.

USDJPY Price Forecast

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