USD/JPY testing the 112 territory out

USD/JPY testing the 112 handle in Tokyo open.
EUR/JPY lends USD/JPY bulls a helping hand.

USD/JPY has just popped onto the 112 handle and the trade war concerns linger, supporting the dollar that has otherwise taken a blow over the past few sessions and dropped back the 95 handle in the DXY. USD/JPY is currently trading at 112.01 having posted a high of 112.08 and just below the 112.14 key resistance.

Draghi was lowering the 2018 GDP forecasts, as expected, but he suggested that the European Union had grown above potential - inflation is on the way, in other words, which is supporting EUR/JPY and USD/JPY higher. USD/JPY has moved up 111.65/88 key pivot area and closes above there are critical for the bull's case that eye a test of the 113.18 July high. Meanwhile, the US Treasury yields have dropped and on the back of the CPI data miss but a move higher will certainly provide further support for the case to the upside. The yield on the benchmark 10-year Treasury note ended at 2.95% - bulls seek 3.00% psychological mark.

Key notes from US session:

Wall Street set to end higher boosted by technology

Key events ahead:

Key US data previews: eyes on retail sales and IP- Nomura

USD/JPY levels

Valeria Bednarik, Chief Analyst at FXStreet explained that in the 4 hours chart, USD/JPY recovered sharply from around the 100 and 200 SMA, which tested late Wednesday:

"The Momentum indicator stabilized above its 100 level and the RSI holds near overbought readings, both reflecting the current quietness rather than suggesting upward exhaustion. A key resistance is now 112.14, August monthly high, with selling interest most likely easing further on a break above it."

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