USD/JPY Current price: 107.81
- Soaring US Treasury yields pushed USD/JPY to its highest since last July.
- Japan’s Consumer Confidence Index improved from 29.6 to 33.8 in February.
- USD/JPY is extremely overbought, but without signs of changing course.
The USD/JPY pair conquered the 107.00 level during Asian trading hours, soaring to 107.89 mid-US session. The catalyst was the Federal Reserve head, Jerome Powell, who repeated ad exhaustion that a rake hike is directly linked to progress towards the central bank goals and inflation, which may take a long time to achieve given the pandemic. US Treasury yields soared afterwards, reaching levels that were last seen in February 2020. The yield on the benchmark 10-year Treasury note hit 1.547%, to later stabilize around 1.53%. Stocks plummeted, with US indexes closing deep in the red.
Japan published at the beginning of the day the February Consumer Confidence Index, which improved from 29.6 to 33.8. Early on Friday, the country will release February Foreign Reserves, although little action is expected coming from the data front until later in the day when the US will publish February employment data.
USD/JPY short-term technical outlook
The USD/JPY pair keeps approaching 108.00 ahead of the Asian opening, with an immediate resistance/target at 108.16, July 2020 monthly high. The pair is overbought in the near-term but without signs of giving up. In the 4-hour chart, technical indicators remain at extreme levels, barely losing their bullish strength. The same chart shows that the 20 SMA heads north around 107.00, while the longer ones are accelerating higher below it. The pair could continue advancing despite the extreme conditions.
Support levels: 107.30 106.95 106.60
Resistance levels: 108.15 108.40 108.75
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