USD/JPY rallies further beyond 136.00 mark, highest since October 1998

USD/JPY gained strong positive traction on Tuesday and rallied to its highest level since 1998.
The Fed-BoJ policy divergence, the risk-on impulse weighed on the JPY and extended support.
Weaker USD might hold back bulls from placing fresh bets amid slightly overbought conditions.

Haresh Menghani FXStreet

The USD/JPY pair caught aggressive bids on Tuesday and surged past the 136.00 mark, hitting its highest level since October 1998 during the early North American session. The pair was last seen trading around the 136.25 region, up over 0.85% for the day.

The Japanese yen has been the worst-performing G10 currency since March amid the ultra-loose monetary policy stance adopted by the Bank of Japan. This has resulted in a further widening of the Japan-US interest rate differential. Apart from this, the strong rally in the global equity markets weighed heavily on the safe-haven Japanese yen and acted as a tailwind for the USD/JPY pair.

The risk-on impulse, along with expectations that the Fed would retain its aggressive policy tightening stance, pushed the US Treasury bond yields higher. This was seen as another factor that impressed bullish traders and provided an additional lift to the USD/JPY pair. The strong move up could also be attributed to some technical buying above the 135.50-135.60 double-top resistance.

Furthermore, oscillators on the daily chart are hovering near the overbought territory. This, in turn, warrants caution before placing fresh bullish bets amid modest US dollar weakness. Hence, a subsequent move up is likely to confront resistance near a two-week-old ascending trend-line, currently around mid-136.00s. Nevertheless, the USD/JPY pair now seems to have confirmed a fresh bullish breakout and any meaningful corrective pullback could be seen as a buying opportunity.

Technical levels to watch

USD/JPY

Overview
Today last price	136.24
Today Daily Change	1.15
Today Daily Change %	0.85
Today daily open	135.09

Trends
Daily SMA20	131.46
Daily SMA50	129.72
Daily SMA100	123.87
Daily SMA200	118.69

Levels
Previous Daily High	135.44
Previous Daily Low	134.53
Previous Weekly High	135.6
Previous Weekly Low	131.5
Previous Monthly High	131.35
Previous Monthly Low	126.36
Daily Fibonacci 38.2%	134.88
Daily Fibonacci 61.8%	135.1
Daily Pivot Point S1	134.6
Daily Pivot Point S2	134.11
Daily Pivot Point S3	133.69
Daily Pivot Point R1	135.51
Daily Pivot Point R2	135.93
Daily Pivot Point R3	136.42

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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