USD/JPY clearing key technical resistance, eyes on fibos at 112.22/33

  • USD/JPY: the 112.30's, (Fibos at 112.22/33) remain key upside targets.
  • (IMM data for the week ending July 3 showed a futures market long an equivalent cash USD/JPY position of $4.4 billion).

USD/JPY rallied to the highest level since January 12th on the last hourly stick, breaking through May's 111.39 high, into a very congested area where the 161.8% of May low & 76.4% of the May drop was located. USD/JPY is currently trading at 111.53 having made a high of 111.64 vs a low of 110.76.

USD/JPY traders picked up the baton in NY with the pair up by 0.21% in a recovery of the drop down to aforementioned lows where news yesterday that the U.S. threatened further of tariffs on $200 bln of Chinese goods sent markets into risk-off mode late in NY, (it was the biggest one-hour drop of July, from 111.27).  

However, the pair has just taken off from 111.25 to 111.64 on broad-based dollar strength. The US 10 year yield has also spiked within the day's range of  2.82-2.86on the day so far, +0.13%; (DXY 94.0910-94.4530, +0.25%). The moves come despite Beijing promising to hit back against Washington's escalating tariff measures, including the use of "qualitative measures". (The safe haven Gold has also dropped and by $4.00on last hourly stick on dollar strength).

A sustained breakout to the upside seems unlikely in the face of ongoing trade war tensions

However, heightened risk aversion will usually sees flows into the relative safety of the yen and a sustained breakout to the upside seems unlikely in the face of ongoig trade war tensions in what seems to be a technically overbought market; (IMM data for the week ending July 3 showed a futures market long an equivalent cash USD/JPY position of $4.4 billion).

USD/JPY levels

So long as the bulls can hold above 110.80 and now the 111.50 level, (a major falling trend line from 2015). Further out, the 112.30's, (Fibos at 112.22/33) remain key upside targets. To the downside, however, below the 200-D SMA at 110.10, the Tenkan prop is located a cent lower at 109.19 that falls below the 109.36 key June support. 108.10 is the May 29 low. 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.