USD/JPY Forecast: Happy days are back, the downtrend is dead, long live the uptrend

• USD/JPY is trading higher amid an upbeat market mood.
• The rise is significant on the charts, with a move above the SMA's. 
• Geopolitical developments could haunt the pair.

USD/JPY is trading above 113.00 once again as several positive developments improve the mood. Black Friday sales were reportedly successful both online and in brick and mortar stores. Americans' shopping sprees improve the mood on Wall Street ahead of the open and send futures higher. USD/JPY is well correlated with the gyrations of equity markets and responds positively.

In the old continent, the European Commission's stand-off with Italy over the budget is seeing a bit of a climb down, especially from Italy. The two coalition parties have signaled a will to negotiate with Brussels and curb the deficit. The news mostly affects the Euro but also diminished demand from the safe-haven yen.

Also in Brussels, EU leaders approved the Brexit deal. While the UK government will still struggle to pass it in Parliament, this is one step forward towards a resolution. The news is also supportive of risk-taking and weakens the yen.

Markets currently ignore other geopolitical risks. Russia and Ukraine clashed over Crimea once again, reminding the world that the crisis remains unresolved. Russia seized three Ukrainian vessels and blockaded the Kerch Straight. Ukraine said it was an act of war. The situation now seems contained, but remains volatile.

Closer to Japan, talks between North Korea and the US have stalled even as both sides are trying to organize another Summit between US President Donald Trump and North Korean leader Kim Jong-un. 

Trump has a more significant encounter this week, with President Xi Jinping of China, where trade tops the agenda. Headlines on the trade war front could move the pair as early as today.

All in all, markets are seeing the glass half-full and this helps the USD/JPY pair move higher.

USD/JPY Technical Analysis - Bulls in control

On its way up, USD/JPY broke above both the 50 and 200 Simple Moving Averages, a considerable bullish sign. In addition, we see that Momentum is positive and that the pair is trading alongside an uptrend channel. 

113.25 capped the pair late last week and remains of importance. Further up, 113.75 held USD/JPY down in mid-November and is a substantial resistance line. 113.00 is a round number and also held the pair down earlier in November. 114.25 was the high point in November. 

Looking down below the two SMA's, 112.80 worked in both directions in recent weeks. It coincides with uptrend support at the time of writing. Next, down the line, we find 112.30 that was the trough late last week. 111.80 was a swing low in late October and serves as a cushion below 112.