USD/JPY spikes to two-week highs
|The greenback was broadly higher on Tuesday and the USDJPY pair was trading 0.50% stronger during the US session, seen at around 106.50. These are the levels last seen on July 24th.
Earlier in the day. data showed that the US Producer prices rose 0.6% month-over-month (double the expected 0.3% rise). That is the biggest MoM jump in headline PPI since October 2018. However, it was not enough to unwind the annual deflationary print at -0.4% YoY).
Traders are still waiting for a definitive deal in the US congress on the new stimulus, which should be agreed on any day now. If this happens, the USD/JPY pair might continue in its bullish trend.
If the 106.50 resistance gets broken to the upside, further bullish momentum could appear, targeting the 106.80 level, where previous lows are located. Bulls need to push the greenback above this level in order for the medium-term trend to change back to bullish.
The next target would then be at 107.40.
Alternatively, if bears reemerge and the 106.50 resistance will be defended, we can see a quick decline to 106.00.
However, sentiment seems bullish as evident from the rising equities, which might support the USD/JPY pair further.
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