USD/JPY: overstretched, but rally far from over

Valeria Bednarik FXStreet

USD/JPY Current price: 112.42

Yen bulls kept unwinding positions overnight, sending USD/JPY to its highest since January.
US June inflation expected to reaffirm Fed's tightening path.

The Japanese yen continued to be smashed during Asian trading hours, with the USD/JPY pair reaching 112.45, its highest since early January. The dollar remains strong but didn't break any relevant level against other major rivals, suggesting that speculative interest is driving the move, particularly considering the risk-averse environment triggered by an escalation in the trade war. In the meantime, risk-related sentiment has improved, with Asian and European indexes up this Thursday, although there's no guarantee that this situation will last.

The US will release today its June inflation figures, expected to have advanced modestly from May's readings. Rising inflationary pressures will support Fed's case of rising rates, but won't modify it. The core CPI is expected to have risen 0.2% MoM and 2.9% YoY. Strong figures will likely keep the pair on the bullish side, despite the upward move is overstretched.

The pair trades a couple of pips away from the mentioned multi-month high, as bulls won't give up, suggesting that the rally will likely continue, despite the extreme overbought conditions seen in intraday technical indicators, as in the 4 hours chart, both hold in extreme levels, without directional momentum. The 100 and 200 SMA gain upward traction well below the current level, still irrelevant after a long period of consolidation. The immediate resistance is now the 112.60 region, with gains beyond it putting the pair once step closer to its target, 113.38, this year high set early January.

Support levels: 112.15 111.70 111.25

Resistance levels: 112.60 113.00 113.40

View Live Chart for the USD/JPY

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.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.