USD/JPY Forecast: Bullish breakout set to extend beyond 109.00

Valeria Bednarik FXStreet

USD/JPY Current Price: 108.71

Japan will release the May Jibun Bank Services PMI, previously at 21.5.
Global equities advanced on hopes, underpinning the pair.
The USD/JPY is bullish despite the sluggish dollar’s demand.

The USD/JPY pair soared to 108.75, its highest in almost two months. The rally seems linked to the bullish breakout of the latest range, as the pair has been over two weeks lifeless below 108.00. Demand for the greenback was limited, further indicating that the advance was the result of stops triggered. Substantial gains in global indexes, backed by economic recoveries’ hopes, lent support to the pair. Treasury yields, in the meantime, posted modest intraday advances.

In the data front, Japan published its Monetary Base, which expanded by 3.9% YoY in May, better than the 2.1% expected. Early Wednesday, the country will release the May Jibun Bank Services PMI, previously at 21.5.

USD/JPY short-term technical outlook

The USD/JPY pair is pressuring daily highs ahead of the Asian opening, overbought in the short-term after adding some 100 pips in a matter of hours, with the movement exacerbated by the precedent tight range. In the 4-hour chart, the pair is above all of its moving averages, with the 20 SMA gaining upward traction just above the larger ones. Technical indicators have partially lost upward strength after entering overbought territory, not yet indicating upward exhaustion.

Support levels: 108.40 108.05 107.70

Resistance levels: 108.80 109.10 109.55

View Live Chart for the USD/JPY

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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