USD/JPY Forecast: Further gains likely as long as 110.50 holds

USD/JPY Current price: 111.00

• BOJ Meeting Minutes shed no light on future monetary policy.
• Japan’s  April Leading Economic Index was upwardly reviewed to 103.8.
• USD/JPY is overbought in the near-term, but bulls retain control.

The USD/JPY pair peaked this Thursday at 111.10, a level that was last seen in March 2020, now hovering around the 111.00 level as the day comes to an end. The pair found support on the generalized optimism that prevailed throughout the first half of the day, retreating during US trading hours on the back of the sour tone of Wall Street. Government bond yields ticked higher on a daily basis, limiting the downside ahead of the close.

 Earlier in the day, the Bank of Japan published the Minutes of its latest meeting, which showed that policymakers are confident on an economic comeback, but higher inflation remains unlikely. Also, the country published the preliminary estimate of the Jibun Bank Manufacturing PMI for June, which printed at 51.5, worse than the 52.3 expected. The April Leading Economic Index was upwardly reviewed to 103.8, while the Coincident Index for the same month resulted at 95.3.  On Thursday, the country will publish the May corporate Service Price Index.

USD/JPY short-term technical outlook

The USD/JPY pair could extend its advance, although its showing signs of upward exhaustion in the near-term. The 4-hour chart shows that the 20 SMA accelerated north above the longer ones, all of them well below the current level. The RSI indicator has turned flat around 68, while the Momentum eases from near overbought readings. Nevertheless, bulls will hold the grip as long as the pair remains above 110.50.

Support levels: 110.50 110.05 109.70  

Resistance levels: 110.95 111.30 111.80

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