USD/JPY jumps to nearly three-month highs, 105.00 a whisker away

The USD/JPY pair witnessed strong buying interest on Thursday and has now jumped to the highest level since late July.

Currently trading at fresh multi-month highs around 104.95 region, within striking distance of 105.00 psychological mark, the pair gained additional leg of bullish momentum since early NA trading session and has been backed by some upbeat economic data points. 

Thursday's economic data showed a drop in weekly jobless claims, which reaffirmed the underlying strength of the US labor market, and pending home sales data witnessed a better-than-expected rebound in September following a larger-than-expected drop in August.

The only disappointment came from durable goods orders, which unexpectedly contracted by nominal 0.1% during September and has failed to alter market expectations of an eventual Fed rate-hike decision by the end of this year. 

From technical perspective, the pair is building on its break-out momentum though 50-day and 100-day SMAs, and is likely to gain further traction on a decisive move above 105.00 psychological mark.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, notes, "According to the 1 hour chart, the pair may continue advancing, as the price is extending further above its 100 and 200 SMAs, while technical indicators head modestly higher, nearing overbought levels. In the 4 hours chart, technical readings also favor an upward move, as the Momentum indicator bounced from its mid-line, the RSI indicator heads south around 65, whilst the 100 SMA advanced below the current level, now acting as dynamic support around 104.00."

"Support levels: 104.00 103.70 103.30
Resistance levels: 104.90 105.35 105.70"