USD/JPY analysis: poised to test 114.54, October high

Valeria Bednarik FXStreet

USD/JPY Current price: 113.79

Easing Treasury yields weighed on the pair Friday despite broad dollar's strength.
Japan inflation at factory levels to be out this Monday.

US Treasury yields pulled back from two-week highs on Friday, dragging the USD/JPY pair lower. The pair settled at 113.80, after hitting a monthly high of 114.08, up for a second consecutive week. Yields eased on the back of signs indicating rising inflation in the US, as producer prices were 2.9% higher YoY in October, just two days after the US Federal Reserve indicated that will keep on rising rates, with the next one expected for December. The benchmark yield for the 10-year Treasury note settled at 3.18% after peaking mid-week at 3.24%. Japan will release the October Domestic Corporate Price Index at the beginning of the week, previously at 3.0% YoY and Machine Tools Orders for the same period.

The USD/JPY pair maintains its positive tone in the daily chart, although the upward momentum seems limited, as it develops well above a bullish 100 DMA, while technical indicators ease within positive ground. In the shorter term, and according to the 4 hours chart, the technical picture is quite alike, as the 100 and 200 SMA are some 100 pips below the current level, while technical indicators hold well into positive territory but without offering directional clues, the Momentum easing modestly and the RSI flat around 60. Beyond 114.10, the pair could extend its gains up to 114.54, October monthly high, with gains beyond this last unclear at the time being.

Support levels: 113.85 113.40 113.00

Resistance level: 114.10 114.55 114.90

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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