FxWirePro: USD/JPY capped below 21-EMA, Greenback on the defensive ahead of jobless claims data

USD/JPY chart - Trading View 

USD/JPY was trading 0.09% lower at 106.92 at around 04:20 GMT, US dollar on the defensive ahead of jobless claims data.

US-China trade/political tension, as well as the risk of the virus wave 2.0, seems to keep risk appetite low.

The US health authorities have poured cold water over the optimism generated by the Trump administration's plan to reopen the economy by warning of a possibility of the second wave. 

Further, Fed's Powell, on Wednesday, dashed hopes for negative rates but said that the path ahead is both highly uncertain and subject to significant downside risk. 

USD/JPY poised for further downside. Recovery remains capped at 21-EMA. Price action finds strong support at cloud base. Break below will see further downside.

Focus on the preliminary reading of Japan’s Machinery Tool Orders for April, as well as US Jobless Claims for impetus.

Trade/virus headlines, will have impact on the immediate direction. Bearish invalidation only above 200-DMA.

Major Support Levels: 

• S1: 106.70 (Cloud base)
• S2: 106.44 (50% Fib)
• S3: 106.09 (Lower BB)

Major Resistance Levels: 

• R1: 107.13 (21-EMA)
• R2: 107.71 (55-EMA)
• R3: 108.23 (200-DMA)