USD/JPY analysis: poised to challenge the yearly high
|USD/JPY Current price: 112.00
- Risk appetite weighed on safe-haven yen, Treasury yields settled at 3-week highs.
- A light macroeconomic calendar Monday anticipates consolidation in USD/JPY.
The USD/JPY pair flirted with yearly highs at the end of the week, finishing it at 112.00, as risk appetite hit hard the safe-haven yen. Not only equities soared worldwide, but also US Treasury yields were sharply up, as investors moved away from 'safer' government bonds. The yield on the benchmark 10-year Treasury note closed at 2.56%, up by 2.55% for the day, and its highest in three weeks. The yield on the 2-year note finished at 2.39%. Market's optimism was triggered late Thursday by a surprise earnings report from JP Morgan, fueled later in Asia by Chinese data, showing that bank lending rose in March while the trade surplus in the same month beat market's expectations. There are no macroeconomic releases scheduled in Japan until next Wednesday when the country will release its March trade balance data.
From a technical point of view, the risk is skewed to the upside according to the daily chart for the USD/JPY pair, although additional gains are not yet clear, as despite settling above all of its moving averages, these last continue to lack directional strength, and confined to a tight range. Technical indicators in the mentioned chart hold on to daily gains, barely losing upward strength near overbought levels. The bullish stance is clearer in the 4 hours chart, given that technical indicators consolidate near daily highs, with the RSI currently in overbought territory, while the price settled well above all of its moving averages, and with the 20 SMA accelerating north above the larger ones.
Support levels: 111.80 111.40 111.10
Resistance levels: 112.15 112.50 112.85
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