USD/JPY Price Analysis: Extends the rally to five-year highs, closes in on 116.00

USD/JPY clears November 2021 highs in a bid to recapture 116.00.
US Treasury yields consolidate near multi-week highs on Fed rate hike expectations.
Ascending triangle breakout on the 1D chart calls for more upside.

Dhwani Mehta FXStreet

USD/JPY is sitting at the highest levels since January 2017, fast-approaching the 116.00 mark, as the US dollar sees a renewed buying interest across the board in Asian trading.

The major continues to draw support from the recent strength in the US Treasury yields across the curve, as investors price in a March Fed rate hike while surging Omicron covid cases globally also keep the returns on the market elevated.

It's worth noting that Treasury yields moved higher throughout 2021 amid concerns about the coronavirus pandemic and inflation. The benchmark 10-year rates jumped above 1.60%, rising as much as 13 basis points on the day.

Looking forward, the Fed-driven sentiment and covid updates will continue to have an impact on the yields, in turn, impacting the major. Also, of note remains the US ISM Manufacturing PMI for trading USD/JPY in the day ahead.

USD/JPY’s daily chart shows that the price has stormed through the ascending triangle resistance at 115.55, triggering a fresh advance to 115.81 multi-year highs. A daily closing above that resistance is needed to confirm the triangle breakout, opening doors for a rally towards 116.00.

The next critical upside target is seen at the 116.50 psychological level.

USD/JPY: Daily chart

The 14-day Relative Strength Index (RSI), however, peeps into the overbought region, warranting caution for bulls.

Any retracement will challenge the daily lows of 115.29 before taking on the 115.00 support area. Monday’s low of 114.95 will be next on the sellers’ radars.

USD/JPY: Additional levels to consider

USD/JPY

Overview
Today last price	115.76
Today Daily Change	0.41
Today Daily Change %	0.36
Today daily open	115.35

Trends
Daily SMA20	114.18
Daily SMA50	114.01
Daily SMA100	112.53
Daily SMA200	111.11

Levels
Previous Daily High	115.37
Previous Daily Low	114.95
Previous Weekly High	115.21
Previous Weekly Low	114.45
Previous Monthly High	115.21
Previous Monthly Low	112.56
Daily Fibonacci 38.2%	115.21
Daily Fibonacci 61.8%	115.11
Daily Pivot Point S1	115.07
Daily Pivot Point S2	114.8
Daily Pivot Point S3	114.65
Daily Pivot Point R1	115.49
Daily Pivot Point R2	115.64
Daily Pivot Point R3	115.91

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

AUD/USD hangs near three-week low, below 0.6950 as traders await US NFP report

AUD/USD hits a three-week low during the Asian session on Friday as the RBA’s dovish shift and a rout in equity markets weigh on the risk-sensitive Aussie. However, the recent slump in US bond yields to a two-month low keeps US Dollar bulls on the back foot and limits losses for the currency pair as traders look to the US NFP report for a fresh impetus.

USD/JPY bounces off three-week low; keeps the red near 157.65 as focus remains on US NFP

USD/JPY bounces off the weekly low set during the Asian session, as bears turn cautious ahead of the US NFP report due later this Friday. The upside seems limited as the recent slump in US bond yields and hopes of Iran war de-escalation undermine the US Dollar. Moreover, a hawkish BoJ and intervention risks support the Japanese Yen, capping the pair.

Gold loses the grip; $4,000 comes next on the downside

Gold sets aside two daily advances in a row on Friday, opening the door to a potential test of the key $4,000 mark per troy ounce. The precious metal’s retracement follows a decent improvement in the sentiment surrounding the US Dollar, solid NFP data and higher US Treasury yields across the board.

Democrats win House and Senate in US midterms: Why isn’t all bad news for crypto

The biggest story this week was Tuesday’s US midterm elections, which saw Democrats win control of both the House and the Senate in a clear blue wave. This political shift in the US has triggered sharp price swings across the cryptocurrency market.

Week ahead – Inflation and geopolitics in focus as US political landscape shifts

Post-midterm election euphoria fizzles out as risk aversion prevails. US CPI, PPI and Fedspeak on the radar as Fed hike bets remain supported. Oil retreat pauses on mixed hopes about the ongoing conflicts.

US Dollar breaks below 101.50 as Democrats sweep Congress

The US Dollar (USD) comes under heavy selling pressure on Wednesday, with the US Dollar Index (DXY) falling around 0.5% to trade near 101.35 after sliding below the 101.50 level. The Greenback retreats to its lowest level in four weeks as investors reassess the political and economic outlook following the Democratic Party's sweeping victory in the United States (US) midterm elections.