FxWirePro Short Term Outlook: Sell dollar, buy yen

The dollar has rebounded after the speech by European Central Bank (ECB) yesterday, however, recent data releases for the month of August, such as PMI reports and non-farm payroll report are pointing to a marked slowdown in the economic activity and that should make the Fed think twice before raising rates this month. This fact is likely to keep weighing on the dollar and should keep the yen well bid.

The yen is likely to benefit from both the weakness in the dollar and a slowdown in economic activity. In addition to that, USD/JPY exchange rate has hit a key resistance line, hence we expect the dollar to decline against the yen and the pair to revisit 98 made during the UK referendum.

Trade idea:

Sell USD/JPY at the current rate of 102.9, with a stop loss around 104.5 area and target around 100 and 98.8 areas.