USD/JPY analysis: bullish case to look better with the price above 113.85

USD/JPY Current price: 113.40

  • Busy Japanese macroeconomic calendar not expected to interrupt sentiment-related trading.
  • US Treasury yields recovered the ground lost in pre-opening operations, underpinning USD/JPY.

The USD/JPY is finishing the day marginally higher after peaking at 113.81, its highest in a month. Such high was reached around midnight GMT when exit polls suggested that Republicans were getting control of both Houses, but as soon as this was denied by numbers, the pair fell to 112.94. The recovery was a result of the strong momentum of equities in Europe and the US, with Wall Street extending its latest rally. In the data front, Japan released the preliminary estimates of the September Leading Index, which fell to 103.9 from 104.5. The Coincident Index for the same month was also lower, down to 114.6 after printing 116.7 in August. Japan has a busy schedule this Thursday, releasing among others, the September Trade Balance, the BOJ's Summary of Opinions and, Machinery Orders. None of them is expected to rock the boat. As for Treasury yields, they are closing the day little changed on the downside, with the benchmark yield for the 10-year note at 3.20%, further underpinning the current advance.

The pair heads into the Asian opening with a positive tone according to technical readings in the 4 hours chart, given that technical indicators have resumed their advances after testing their midlines, while the price held above its 100 and 200 SMA, with the shortest barely advancing below the larger one, falling short of signaling building upward momentum. Things would look better on an advance beyond the 113.85 level, with scope then to extend the advance up to 114.54, October monthly high.

Support levels: 113.00 112.60 112.30  

Resistance levels: 113.85 114.10 114.55

View Live Chart for the USD/JPY

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