- The USD/JPY pair is trading at the highest level since mid-December and is currently sitting well above the 200-week moving average.
- Yield differentials will likely continue to favor the USD bulls.
- US-China trade tensions to play spoilsport.
The USD/JPY is trading at nine-month highs above the 200-week MA in Asia.
The pair rose to 113.47 yesterday – the highest level since mid-December and was last seen at 113.36.
Further, it climbed the 200-wee MA hurdle of 113. 20 in a convincing manner yesterday, validating the long-term bull break above the trendline sloping downwards from 2015 highs.
The stellar rise is likely associated with the strong US data releases, according to Kathy Lien from BK Asset Management. For instance, the latest US GDP report published yesterday showed that economy expanded at the fastest pace in nearly four years. Further, August durable goods blew past expectations.
What’s more, the hawkish interpretation of the Fed’s decision to remove the word “accommodative” likely put a bid under the greenback as well.
Looking forward, the growing divergence between the Fed and the Bank of Japan (BOJ) could see yield differentials widen further in a USD-positive manner.
However, the US-China trade tensions could spoil the bull party. According to FXStreet Editor and Analyst Ross Burland, “USD/JPY tends to hang in the balance of such geopolitical angst with the yen catching a repatriation bid at times of extreme risk-off sentiment in the markets attracting subsequent risk-off flows.”
As for today, a minor pullback could be seen if the US core personal consumption expenditure price index, scheduled for release at 12:30 GMT, misses estimates, driving the 10-year treasury yield down to the key support of 3.016 percent. A better-than-expected Japanese inflation data released earlier today has had little impact on the pair.
USD/JPY Technical Levels
Resistance: 113.75 (December 2017 high), 114.74 (November 2017 high), 115.00 (psychological hurdle)
Support: 113.20 (200-week MA), 112.66 (10-day MA), 111.12 (August high)
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 assets. 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 Open Markets 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. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD gains ground on hawkish RBA, Nonfarm Payrolls awaited
The Australian Dollar continues its winning streak for the third successive session on Friday. The hawkish sentiment surrounding the Reserve Bank of Australia bolsters the strength of the Aussie Dollar, consequently, underpinning the AUD/USD pair.
USD/JPY: Japanese Yen advances to nearly three-week high against USD ahead of US NFP
The Japanese Yen continues to draw support from speculated government intervention. The post-FOMC USD selling turns out to be another factor weighing on the USD/JPY pair. Investors now look forward to the crucial US NFP report for a fresh directional impetus.
Gold lacks firm near-term direction, remains stuck in a range ahead of US NFP
Gold price struggles to gain any meaningful traction amid mixed fundamental cues. The Fed’s less hawkish outlook drags the USD to a multi-week low and lends support. Bets for a delayed Fed rate cut and a positive risk tone cap gains ahead of the US NFP.
Solana price pumps 7% as SOL-based POPCAT hits new ATH
Solana price is the biggest gainer among the crypto top 10, with nearly 10% in gains. The surge is ascribed to the growing popularity of projects launched atop the SOL blockchain, which have overtime posted remarkable success.
NFP: The ultimate litmus test for doves vs. hawks
US Nonfarm Payrolls will undoubtedly be the focal point of upcoming data releases. The estimated figure stands at 241k, notably lower than the robust 303k reported in the previous release and below all other readings recorded this year.