USD/JPY analysis: at a brink of the yearly high

Valeria Bednarik FXStreet

USD/JPY Current price: 113.40

Tokyo inflation seen posting modest gains in September.
Yen under pressure despite little action in T-yields.

The USD/JPY pair surged to a fresh multi-month high of 113.46, not far from its yearly high of 113.74 set last January. Dollar's strength, alongside with a strong advance in US equities backed the rally, with the latest underpinned by headlines indicating that China is open to negotiations to resolve the trade issues with the US and added that the extreme pressure from the country wouldn't cripple the Chinese economy. US Treasury yields slipped at the beginning of the day but recovered later to settle around Wednesday's closing levels. During the upcoming Asian session, Japan will release Tokyo inflation figures for September, seen little changed from the previous estimates, alongside with retail sales, unemployment and Industrial Production data. While Japanese data tends to have a limited effect in price action, worse-than-expected numbers could exacerbate the ongoing yen's weakness.

The pair holds near its daily high ever since reaching it, somehow suggesting that buyers are willing to keep pushing it higher. A strong static resistance area comes at 113.90, as the pair topped right below the level several times by the end of 2017. Technical readings in the 4 hours chart favor another leg higher, as technical indicators extended their advances within positive territory, with the RSI near overbought readings, and the pair further above bullish moving averages.

Support levels: 113.20 113.80 112.45

Resistance levels: 113.50 113.90 114.40

View Live Chart for the USD/JPY

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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