USD/JPY analysis: bullish potential rises on break above 112.14
|USD/JPY Current price: 112.35
- Yen pressured by risk appetite, US T-yields rising to their highest since last May.
- Japanese trade balance expected to post a widening deficit of¥-144.1B from the previous ¥-45.6B.
The USD/JPY pair surged to its highest in almost two months, breaking decidedly through August high as US Treasury yields jumped to levels last seen in May. The yield on the benchmark 10-year Treasury note hit 3.04% and settled around this last, as a result of the latest batch of tariffs the US and China slapped each other. Equities rallied and safe-haven assets were dismissed, as Trump's announcement cleared uncertainty and was less aggressive than feared, weighed on bonds demand. Yields move inversely to bonds' prices. Japan is scheduled to release August trade balance figures during the upcoming Asian session, with the merchandise trade balance deficit seen widening to ¥-144.1B from the previous ¥-45.6B.
The pair heads into the Asian opening holding on to gains around 112.40 and at risk of extending its advance after breaching August high at 112.14, now the immediate support level. In the 4 hours chart, the pair continues moving away from its 100 and 200 SMA, with the shortest gaining upward traction, currently at around 111.45. In the mentioned chart, the Momentum indicator eases within positive territory, as a result of the pair being unable to surpass its previous high, but given that it remains near daily highs, and the RSI maintains gains around 65, the overall risk leans to the upside.
Support levels: 112.15 111.80 111.45
Resistance levels: 112.60 112.90 113.20
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