USD/JPY analysis: makes fresh highs but fails to hold
|USD/JPY Current Price: 108.50
The USD/JPY pair has continued to trade in a horizontal fashion on Tuesday, unable to pick up directional strength in either direction. The pair did stretch to a higher high of 108.80, underpinned by the prevailing positive mood, as equities advanced in Asia and Europe, while US Treasury yields extended their gains, but it was quickly rejected. Overnight, Japan released May's Money Supply, which increased 2.7% YoY, and Machine Tool Orders for the same month, which plunged a whopping 27.3% following a 33.4% fall in April.
Technical indicators in the 4 hours chart offer a slightly positive stance, as the price holds above its 20 SMA, which have lost its bullish strength, while the Momentum indicator points north and the RSI remains flat above its midline. USD/JPY needs a break above the 108.80 zone (top of its weekly range) to challenge next resistance area around 109.10 (100-SMA in 4H) en route to 109.80 (200-SMA in 4H). The risk will turn to the downside only with a break below 107.90, which could accelerate losses toward 107.50.
Support levels: 108.25 107.90 107.50
Resistance levels: 108.80 109.10 109.80
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