USD/JPY taking on the bearish commitments at 105 the figure

  • USD/JPY breaking the 105 figure and bulls look to ride to 105.50.
  • Bears will seek an opportunity to get involved with a fresh impulse to the downside and break monthly support.

USD/JPY is trading at 105.03 at the time of writing having travelled between a low of 104.84 and 105.09, up some 0.1% so far on dollar strength.

USD/JPY rose a net 0.3% on the prior day to 104.95 and has just breached onto the 105 area marking its highest score since 16th Sep.

The US dollar index rose against most major currencies at the start of this week, fuelling the bid in the pair despite various geopolitical concerns and prospects of a slower global economic recovery.

US stocks have been troubled by the turn in positive sentiment at a time where there are doubts of US stimulus and the relentless spread of the coronavirus. 

The combination of risks is giving rise to a bid in the greenback that is correcting the perceived dovish stance from the Federal Reserve.

In fact, the dollar was helped along with wit comments from the Chicago Fed President Evans who said the Fed could raise rates before the 2% average inflation target was reached.

Nevertheless, US 2-year Treasury yields remained in a 0.13%-0.14% range while the 10's ranged between 0.66% and 0.68%.

USD/JPY levels

USD/JPY has completed a textbook impulse-correction-impulse on the hourly time frame to print fresh highs.

This has also been a breakout of a reverse head and shoulders pattern on the 4HR time frame. 

Resistance is seen towards 105.40/50 as the price completes a 50% mean reversion of the daily bearish impulse to the market's structure.

Bulls will look to ride the price while above 105 and bears will be looking for opportunities to the downside from said resistance. 

Daily chart

Monthly chart

There are still 7 days and 21 hours until the monthly close, but a close below the 105.70 support will seal the deal for the bears.

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