USD/JPY Forecast: Dollar advances as US inflation concerns recede

Valeria Bednarik FXStreet

USD/JPY Current price: 109.83

The American currency is up as government bond yields eased from weekly tops.
Upbeat US data indicates the country has already turned the corner on the pandemic crisis.
USD/JPY could extend its advance but needs to accelerate above 110.10.

The dollar recovers, and the USD/JPY pair is up, trading near a daily high of 109.88. Stocks are marginally higher while US government yields ease, somehow indicating investors prefer to focus on US economic growth instead of on inflationary pressures. However, the picture may well be temporal, as Federal Reserve officials have hinted they are willing to discuss tapering for the first in over a year.

The macroeconomic calendar will have little saying on USD/JPY today. Japan published the May Monetary Base, which increased 22.4% YoY, missing the expected 25.2%. The US will publish MBA Mortgage Applications for the week ended May 28, and IBD/TIPP Economic Optimism for June.

USD/JPY short-term technical outlook

The USD/JPY pair is poised to extend its advance, with limited bullish momentum. The 4-hour chart shows that the price is consolidating above a flat 20 SMA, while the longer moving averages remain directionless below the current level. Technical indicators entered positive territory but lost their bullish strength. The pair could have better chances of rallying once above 110.10, the immediate resistance level.

Support levels: 109.60 109.20 108.85

Resistance levels: 110.10 110.45 110.80

View Live Chart for the USD/JPY

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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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