With risk appetite improving early this week, the outlook for the yen has taken a knock. Even against the dollar (which has also been hit amidst improved risk flows), this is driving USD/JPY higher. There is now beginning to build some positive traction on the pair and pressure is building on the old April resistance around 108.00/108.10. This comes as a mini uptrend continues to build over the past two weeks (today at 107.25) and momentum indicators position for breaches of this resistance. The RSI is now edging towards 8 week highs, along with Stochastics moving towards strong positive configuration. A slight pullback into the close last night has been supported today and although another move on 108.00 has initially been rebuffed, the pressure is mounting. A close above 108.10 would confirm a breakout and arguably a small base pattern that would imply a test of the 109.40 April high. The hourly chart shows support forming at higher levels and near term buying into weakness. A breach of 107.20 would change this recovery outlook and neutralise the move once more.

USDJPY chart

 

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