USDJPY has been trading in a tight range in the past couple of days as traders wait for the further updates on Brexit and US – China trade talks. The major resistance is still located at $109.00.
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In one of their latest reports, Danske Bank noted that Japanese economy is still in a strong state, especially household consumption and strong investments.
“A strengthening of the JPY of about 4% y/y poses a headwind for exporters along with the global slowdown, which has caused a decline in demand for especially semiconductor manufacturing parts. Even so, export volumes were up 2.7% y/y in September and we expect GDP-growth around 1.5% q/q annualised in Q3.”
The report also takes a closer look at potential risks for the yen, with US – China trade talks and the global economic outlook singled out. All in all, Danske Bank analysts believe that the greatest risk for JPY is that the “global monetary policy response is not sufficient to curb a threatening downturn in economic activity”.
Technically, USDJPY still trades above the short-term support of $108.50. Lower, we still have the 100 DMA at $107.56 in case USDJPY slides lower. On the upside, the ascending trend line is still the major resistance for bulls, together with the 200 DMA sitting just above the $109.00 mark.