USD/JPY analysis: at daily highs, 113.17 still key

Valeria Bednarik FXStreet

USD/JPY Current price: 112.96

BOJ to maintain the current ultra-loose policy until inflation reaches 2.0% target.
USD/JPY underpinned by equities' recovery, higher US T-yields.

The USD/JPY pair is modestly up for a fourth consecutive day, hovering right below its daily high of 112.97 ahead of the Asian opening, as a better performance in worldwide indexes and higher bond yields kept it up during the last trading session of the day, with T-yields reaching fresh 5-month highs. The day started with the Minutes of the September BOJ's Meeting Minutes, which showed that while some policymakers are concerned about the potential dangers of maintaining the current ultra-easy policy, others consider increasing stimulus to quicken the achievement of the bank price target. BOJ's Governor Kuroda later repeated that the current program will remain in place until reaching the 2% inflation target, something still seen quite far away and according to Kuroda, taking more time than expected. Japanese July Leading Index fell which less-than-estimated reaching 103.9, its lowest level since November 2016. The Coincident Index that reflects the current economic activity decline to 116.1, down from the first estimate of 116.3. There won't be macroeconomic releases from the country during the upcoming Asian session.

The pair is biased higher according to intraday technical readings, although still needs to clear July's high at 113.17 to attract more bulls, with the upward movement then, with room to extend up to the 114.60/70 region, where the pair settled monthly highs back in December and January. In the short term, and according to the 4 hours chart, the risk remains skewed to the upside, as the price is comfortably consolidating near its recent highs and far above bullish moving averages, while the Momentum indicator is now at fresh weekly highs, bouncing from its mid-line as the RSI hovers near overbought readings with no signs of giving up.

Support levels: 112.45 112.15 111.80

Resistance levels: 113.20 113.50 113.90

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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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