FxWirePro: USD/JPY extends marginal gains, upside likely to be limited

USD/JPY chart - Trading View 

USD/JPY was trading 0.10% higher on the day at 105.53 at around 04:50 GMT, edging slightly lower from session highs at 105.61.

Investors cautious amid risk of a disputed U.S. election outcome and as a deadline to pass an economic stimulus bill approached.

Treasury yields rise on fiscal relief hopes, as well as the strong September Retail Sales. But caution likely to prevail amid political and economic uncertainty.

Europe continues to report record daily coronavirus infections, another cause of concern for markets which are already struggling to recover.

Focus now on the final debate between U.S. President Donald Trump and his Democratic challenger Joe Biden on Thursday for any shift in the trajectory of the election.

From a technical perspective, the pair is in a major downtrend with limited upside potential. Price action grinds lower in a downward sloping channel. Intraday price action finds resistance at 21-EMA at 105.50. 

Major Support Levels: 

S1: 105.10 (Lower BB)

S2: 104.45 (trendline)

S3: 104 (psychological mark)

Major Resistance Levels: 

R1: 105.50 (21-EMA)

R2: 105.77 (55-EMA)

R3: 106.29 (110-EMA)

Summary: Upside in the pair lacks traction. However, decisive break above 55-EMA could see minor upside. Cloud breakout will take the pair higher to test 200-DMA. Rejection at 21-EMA will see dip till 104 levels.