USD/JPY Forecast: Dollar’s strength persists on stimulus hopes

Valeria Bednarik FXStreet

USD/JPY Current price: 104.14

US Treasury yields pared gains and retreated, still standing at multi-month highs.
Modest losses in equities prevent USD/JPY from extending its current advance.
USD/JPY is bullish in the near-term faces critical resistance around 104.50.

The American dollar keeps advancing backed by a mixture of risk-aversion and speculation of more fiscal stimulus coming in the US. The USD/JPY pair hit 104.21, its highest in over three weeks, holding above the 104.00 mark. The advance was limited amid easing Treasury yields, which retreated modestly from multi-month highs as the week kicked in.

Japan started the week with a holiday, which means the country didn’t publish relevant economic data. The US calendar will also be quite light, as it includes some bond auctions and speeches from FOMC member. Meanwhile, European indexes are in the red, although losses are modest at the time being.

USD/JPY short-term technical outlook

The USD/JPY pair is trading around 104.10, retaining its bullish stance. In the 4-hour chart, the pair is developing above all of its moving averages. The 20 SMA heads firmly north above the 100 SMA and seems poised to gain ground beyond the 200 SMA. Technical indicators consolidate within overbought levels, without signs of bullish exhaustion. A daily descendant trend line coming from March 2020 provides critical resistance in the 104.50 region.

Support levels: 103.85 103.50 103.15

Resistance levels: 104.50 104.90 105.30

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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