USD/JPY: There is a real prospect of a recovery gathering pace [Video]
|USD/JPY
A broad risk positive bias (which drove Treasury yields higher) meant that Dollar/Yen was strong yesterday. This has now driven a two week closing high and the market above 106.00. It means that the 106.00/106.60 resistance band is now being breached this morning to generate traction in the technical rally. A close above 106.60 would be a strong signal that the bulls are really gaining confidence for a recovery. Yesterday seemed to be a session in which sentiment shifted. Looking at the momentum indicators there is a real prospect of a recovery gathering pace now. RSI is rising into the 50s and Stochastics rising off a “bull kiss”, whilst MACD lines are also accelerating off a cross higher. A close above 106.60 would open 107.50 as the next resistance, which would be the test for a real game changer. For now this is still just an unwind into resistance, but if 107.50 can be breached as a lower high, then the whole trend set up would have changed. How the market responds to 106.45 (breakout above last week’s high) will also now become a key near term gauge. A break back under 106.00 would be disappointing now, with support at 105.30 becoming a key higher low.
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