- USD / JPY rally from 104.35 finds resistance at previous support at 104.95.
- The dollar remains trapped within a downtrend channel.
The US dollar reversal from weekly highs at 105.75 witnessed on Wednesday has been contained in the 104.30 area on Thursday and the dollar attempted to rebound amid a broad-based dollar strength, although the pair failed to regain support level. previous turned into resistance, just below 105.00.
The dollar rises due to risk aversion
The US dollar trimmed previous losses on Thursday amid a widespread race for safety after US President Trump crushed hopes of a US stimulus deal ahead of the November election. Trump accused Democrats on Twitter of being unwilling to reach an acceptable deal that dampened investor optimism and offered respite from the dollar’s decline.
Additionally, positive weekly US unemployment claims, which posted a larger than expected decline last week: 787,000 versus market expectations of 860,000, provided further support for the US dollar.
USD / JPY capped below previous support at 104.90
However, USD / JPY’s bullish attempt has been subdued and the pair continues to trade within a clear downtrend channel. The dollar’s rebound from the 104.35 low has found resistance just below the 104.95 / 05 area, where the October 2 and 14 lows are located. If the pair manages to break that level, the next resistance is at 105.50 / 60 (October 21 high / 50-day SMA) before 106.10 (October 7 high).
Conversely, a bearish reversal below the Oct 21 low at 104.35 could find support at 104.00 (Sept 21 low) before heading to the March 12 low at 103.10.
Daily chart
Credits: Forex Street
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