USD/JPY: eyes on a break of 110 handle resistance to open 112 territories

USD/JPY: bulls break and stay above the previous Tenkan, bullish technicals.
USD/JPY: yield spreads remain a critical headwind for the yen.

Ross J Burland FXStreet

USD/JPY has popped the resistance of 109.30/40 and did so overnight in Tokyo, climbing to as high as 109.63 by the close of the opening hour. There was a little pullback to 109.43 where bulls stepped in again pushing the pair up to 109.80 for European traders to take over the baton. Currently, USD/JPY is trading at 109.74, up 0.57% on the day, having posted a daily high at 109.85 and low at 109.00.

The move in USD/JPY was technical, but the fundamentals are stacked up when considering that yield spreads remain a critical headwind for the yen, and there are fresh decade wides in the 2Y U.S.-Japan spread as the 10Y pushes back toward its recent highs. The 10's hit 3.01% again today before falling back to 2.99% currently. Today, DXY is sat around the open of 93.04 trading within a range of between 92.8410-93.4160. Risk reversals are shifting in a bearish manner for the yen and EURJPY has rallied back above the psychologically important 130 level - (130.49 the high so far).

Key events ahead

Atlanta Federal Reserve Bank President Raphael Bostic to speak at the World Affairs Council in Jacksonville, Florida at 17:15 GMT.
Consumer price inflation due on Thursday.

USD/JPY levels

Technicals lean bullish with RSI on the way to 70 and momentum picking up on the dailies as well. The 200-DMA and 61.8% at 110.18 are eyed through 110.03 1st May high. Bulls can then look for a break of the 61.8% of the Nov-Mar drop & Nov low at 110.85. This will open up risk towards the 112 handle. To the downside, attention would be towards a break below the 108.50 level. This will open risk towards the 50-D SMA (107.15) before the 2018 low at 104.63 as a key support. 104.20 gives way to a downside measured target of 102.58, guarding a run to 101.19/99.00 as the June-to-November 2016 lows ahead of 100.70/99.00.

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.

GBP/USD hits multi-week tops around 1.3560

GBP/USD gathers fresh steam and advances to new three-month peaks near the 1.3560 zone on Friday. Cable’s sharp move higher comes after three daily drops in a row and follows the increasing selling pressure hurting the Greenback.

EUR/USD pops to fresh two-month highs, targets 1.1600

EUR/USD advances markedly, revisiting the upper 1.1500s for the first time since mid-June. The pair’s sharp uptick comes on the back of a strong retracement in the US Dollar amid BoJ intervention chatter and despite steady uncertainty in the Middle East.

Gold picks up pace, approaches $4,400

Gold rebounds toward the $4,400 mark per troy ounce on Friday, reversing the previous day’s pullback. The precious metal’s recovery comes as fresh and intense weakness keep weighing on the US Dollar, while traders keep assessing easing expectations of an imminent Fed interest rate hike and the situation from the Middle East.

Pi Network Price Forecast: PI extends consolidation as bulls eye $0.10

Pi Network (PI) price holds steady on Friday, maintaining a consolidating tone for three consecutive days. Mild retail strength in the PI token remains stable, with Open Interest above $9 million, while social buzz eases. PI token’s technical outlook is mixed, as bearish momentum wanes to neutral, with bulls eyeing the $0.1000 psychological level.

Weekly focus: Some relief in US inflation concerns

Actual inflation data for July came out as expected with a 0.1% m/m increase in headline CPI and 0.2% excluding food and energy. Annual headline inflation remains too high at 3.4% and means that wage earners are experiencing stagnating spending power at best, and core inflation is a bit higher than the inflation target of two percent would suggest.

Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.