USD/JPY Forecast: Bulls aiming to test the year’s high

USD/JPY Current price: 110.21

• The Bank of Japan maintained its monetary policy unchanged as widely anticipated.
• US Treasury yields retreated to the lower end of its latest range.
• USD/JPY has room to extend its advance toward the 110.96 level.

The USD/JPY pair settled at 110.20, unchanged on Friday although up on a weekly basis. The pair seesawed between gains and losses, unable to find a direction, trapped between persistent dollar demand and the sour tone of equities and yields. The yield on the 10-year US Treasury note continued to retreat, to finish the week at the lower end of its latest range at 1.44%.

Japan published May National inflation data, which was better than anticipated, down 0.1% YoY against the -0.7% expected. The Bank of Japan had a monetary policy meeting, yet as widely anticipated, the monetary policy was left unchanged. Governor Haruhiko Kuroda repeated the usual message of easing further as needed to reach the bank´s 2% goal, even after the pandemic crisis is contained. On a positive note, he added that the local economy is picking up. The country won’t publish macroeconomic data this Monday.

USD/JPY short-term technical outlook

The USD/JPY pair holds on to its positive stance in the daily chart, as it keeps developing above bullish moving averages, with the 20 SMA providing dynamic support at around 109.70. Technical indicators pared their slides within positive levels, with the Momentum aiming to recover and the RSI consolidating around 57. In the 4-hour chart, The pair is neutral-to-bullish, as it can’t recover above a flat 20 SMA, but keeps developing above the longer ones. Technical indicators stand directionless within positive levels. The pair can extend its advance towards 110.96, this year high and the level to surpass to return to the bullish path.

Support levels: 109.70 109.30  108.90

Resistance levels: 110.50 110.95 111.20  

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