USD/JPY Forecast: Poised to challenge the 105.60 resistance area

Valeria Bednarik FXStreet

USD/JPY Current price: 105.48

Japan will publish the preliminary estimate of the December Leading Economic Index.
US Treasury yields keep advancing, 10-year note yield at one-month highs.
USD/JPY is overbought but without technical sings of bullish exhaustion.

The USD/JPY pair kept rallying on Thursday, reaching a fresh 2021 high of 105.49. Demand for the greenback and rising US Treasury yields were behind USD/JPY rally this week, further boosted this Thursday by substantial gains in Wall Street. The yield on the benchmark 10-year note hit an intraday high of 1.162%, its highest in a month.

Japan will publish December Overall Household Spending on Friday, foreseen at -2.4%, and the preliminary estimate of the December Leading Economic Index, foreseen at 97.9 from 96.4 previously. The Coincident Index for the same period is expected at 86 from 89 in November.

USD/JPY short-term technical outlook

The USD/JPY pair trades a few pips below the mentioned daily high, overbought in the near-term, but without signs of an imminent direction’s change. In the 4-hour chart, the pair has moved further above a bullish 20 SMA, while the Momentum indicator eased just modestly from daily highs. The RSI indicator consolidates around 77, reflecting the limited volume at the end of the day rather than indicating bullish exhaustion. The next relevant resistance comes at 105.67, the daily high from November 22.

Support levels: 105.20 104.85 104.40

Resistance levels: 105.65 106.00 106.40

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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