USD/JPY analysis: aimed to close a gap at 111.24
|USD/JPY Current price: 110.66
- Market mood improved after the US Commerce Department eased pressure on Huawei.
- US Treasury yields extended their recovery after flirting with yearly lows.
The USD/JPY pair jumped to 110.66, its highest in two weeks, as speculative interest welcomed Powell's words dismissing speculation about an upcoming rate cut in the US. Also, equities bounced after the US administration eased pressure on local companies that do business with Huawei, rolling back some of the sanctions imposed to the Chinese company and granting operations between both parts for the next three months. European indexes closed with modest gains, while Wall Street posted a nice comeback after Monday's slump. The dollar suffered an intraday decline with Brexit news, although the USD/JPY pair didn't take notice, nor of disappointing US housing data. Lending support to the pair, US Treasury yields advanced, with the benchmark 10-year note yield reaching 2.44% to finally settle at 2.41%. Early Wednesday, Japan will release April Trade Balance and March Machinery Orders, although the most relevant event of the day will be the release of FOMC Meeting's Minutes later in the day.
The pair trades a couple of pips below its daily high, bullish short-term, according to the 4 hours chart, as the 20 SMA keeps advancing below the current level and providing intraday support, while the pair broke above the 100 SMA, for the first time above it this month. Technical indicators in the mentioned timeframe have lost upward strength after reaching overbought territory, still not giving signs of changing course. The pair has broken above the 61.8% retracement of its latest daily slump, now a static support at around 110.20. Should the current momentum continue, the pair will fill the weekly opening gap left two weeks ago at 111.24.
Support levels: 110.20 109.75 109.40
Resistance levels: 110.95 111.25 111.60
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