USD/JPY analysis: holding near three-week high

Valeria Bednarik FXStreet

USD/JPY Current price: 110.48

The USD/JPY pair continued advancing, reaching its highest since mid August during the US afternoon, backed by further gains in US Treasury yields. Holding within a narrow day ever since the day started, yields gained ground following market talks over the upcoming US tax reform. News made the rounds on Republicans to outline tax plans by the end of this month, to be later sent for approval into the Congress. By the end of the US afternoon, the 10-year note yield was around 2.19%, up from 2.17% Tuesday and 2.06% on Friday. The pair struggled after an early top at 110.28, retreating from the level to find strong buying interest around the 110.00 threshold, forcing bears to pull back, resulting later in a bullish breakout that sent the pair up to 110.68. The pair filled the gap left in the past week, but now has this week's one at 107.62 yet to be filled, something quite unlikely for the short term with the pair advancing beyond 110.00. The Japanese macroeconomic calendar has little to offer today, but July industrial production figures, with investors clearly focusing on US inflation. Technically, the pair retains its bullish stance, despite overbought as in the 4 hours chart, the price has continued advancing above its 100 and 200 SMAs, now directionless, whilst technical indicators have stabilized within overbought territory.

Support levels: 110.25 109.70 109.35

Resistance levels: 111.05 111.50 111.90

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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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