USD/JPY breaking highs, bulls can target 111.60

Ross J Burland FXStreet

USD/JPY is up to the highs again with positive headlines for the Trump administration that is supporting the bid in the dollar and risk. USD/JPY is currently trading at 110.86 with an Asian low of just 110.76.

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USD/JPY has exceeded the previous session's highs of 110.85 and the price remains solid in the open of Tokyo. The most recent headline in respect to trade talks between China and the Us that are taking place currently is that China's representative Liu He is willing to work with U.S. on trade issues and that China has offered a $200bn/year trade deficit reduction package to the US.

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US data supportive

Besides US yields making fresh highs in the 10's at 3.10%, another supporting factor was a clean sheet of positive data from the overnight session in New York with the Initial jobless claims increasing marginally by 11k to 222k in the week ending 12 May, while the four-week average declined 3k to 213k. The Philly Fed general business conditions index jumped 11.2pp to 34.4 in May, well-above the six-month average of 26 and above expectations.

Domestically for Japan, the National CPI for April. Inflation was expected to pick up 0.7% on a yearly basis, down from the previous 1.1%. however, that headline number came in short at 0.6% - excluding Fresh Food came in at 0.7% as a miss as well vs the expected 0.8%, and prior was 0.9%. 'Core-core' national CPI excluding food and energy y/y arrived at 0.4% in line with the expected 0.4%, vs prior 0.5%.

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that the pair seems comfortable above 110.45, the immediate support and the upside remains favoured:

"In the 4 hours chart, the pair keeps advancing well above bullish 100 and 200 SMA, while technical indicators have turned modestly lower near oversold readings. The next relevant resistance and probable bullish target comes at 111.60."

EUR/JPY has come under pressure, 131.25/28 caps, targets 128.96 - Commerzbank

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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