USD/JPY analysis: bulls taking over

Valeria Bednarik FXStreet

USD/JPY Current price: 108.66

BOJ to maintain "very strong accommodative policy," to achieve its 2% goal.
Yields at multi-year highs boosted the USD/JPY pair.

The USD/JPY pair trades at its highest since early February, up for the day roughly 100 pips, it's largest daily gain for this month. Safe-haven assets came under strong selling pressure as the DXY surged to its highest in over a month, now at 90.62, boosted by US Treasury yields, with the benchmark for the 10-year note flirting with 3.0%, its highest since January 2014. Earlier in the day, Japan released its April preliminary Nikkei Manufacturing PMI, which beat expectations by printing 53.3. Also, BOJ's Kuroda said that the central bank may be able to wind down facilities sometime within the next five years, the first clear reference on the issue, but with such a long window of time that hardly made it to the trading desks. To achieve their inflation goal of 2%, "Japan must continue very strong accommodative policy for some time," according to his words. The fact that the pair broke its range to the upside is quite suggestive, and while a downward correction is not yet out of the table, the trend seems to have found its way, as long as the greenback doesn't fall out of market's favor again. Technically, the 4 hours chart shows that indicators accelerated north, maintaining their upward strength despite being in extreme overbought territory. In the same chart, moving averages gain upward traction far below the current level, becoming irrelevant as short-term supports.

Support levels: 108.10 107.70 107.30

Resistance levels: 108.70 109.05 109.40

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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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