USD/JPY technical analysis: On the rise, 106.86 is key resistance

USD/JPY has picked up a bid, possibly tracking the rise in the US yields and the S&P 500 future.
A break above 106.86 is needed to confirm an inverse head-and-shoulders breakout.

Omkar Godbole FXStreet Contributor

USD/JPY is better bid at press time, possibly due to an uptick in the futures on the S&P 500 index and Treasury yields.

The pair is currently trading at 106.47, up more than 20 pips from the low of 106.22 seen in the early Asian trading hours.

The S&P 500 futures are currently reporting 0.24% gains. The index fell 0.79 percent on Tuesday, snapping a three-day winning streak.

Meanwhile, the US 10-year Treasury yield is trading at 1.574%, representing a two basis point gain on the day.

Looking forward, the pair may extend gains if the S&P 500 futures remain in the green, weakening demand for the anti-risk JPY.

The technical outlook, however, will turn bullish if the pair rises above 106.86, confirming an inverse head-and-shoulders breakout on the 4-hour chart.

The breakout, if confirmed, would open the doors for 108.67. The daily chart is reporting a bullish divergence of the relative strength index, so the pair could confirm breakout with a move above 106.86.

4-hour chart

Trend: Bullish above 106.86

Pivot points

1. R3 107.09
2. R2 106.89
3. R1 106.56
PP 106.36
1. S1 106.03
2. S2 105.83
3. S3 105.5

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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