USD/JPY analysis: pointing to a bullish extension

Valeria Bednarik FXStreet

USD/JPY Current price: 110.15

Japan Coincident and Leading Economic Indexes for April up next.
US Treasury yields surging to weekly highs push the pair higher at the end of the day.

The USD/JPY pair hit a 2-week high of 110.22 this Wednesday, as the positive market mood played against the safe-haven yen. The pair followed the lead of US Treasury yields during the American session, pulling down and bouncing back alongside with them. The benchmark 10-year Treasury note hit 2.98%, its highest for this week, helping the pair settle a few pips above the 110.00 level. US generally positive data had no effect on the pair, led purely on sentiment. During the upcoming Asian session, Japan will release its April preliminary Coincident Index, foreseen at 117.8 from previous 116.3 and the Leading Economic Index, expected at 105.6 against the previous 104.4. While the release itself tends to have a limited effect on the pair, is quite a relevant measure of Japanese business activity that will end up weighing on the yen. From a technical point of view, the pair has been struggling for most of the last two sessions with the 61.8% retracement of its latest daily decline at 110.15. The 4 hours chart shows that the pair settled above its 100 and 200 SMA for the first time since in two weeks, while technical indicators regained the upside, with the Momentum at fresh weekly highs and the RSI near overbought readings and within familiar ranges, all of which supports the upside, without confirming it yet. Relevant daily highs come as the immediate resistances on a break higher, 110.44 May 15th high and 110.90, May 22nd daily high. The upward potential will likely fade on a slide below the 109.75 support.

Support levels: 109.75 109.35 109.00

Resistance levels: 110.45 110.90 111.20

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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