USD/JPY Forecast: More gains in the docket

Valeria Bednarik FXStreet

USD/JPY Current price: 105.09

Raising yields and equities on US stimulus hope, provided support to USD/JPY.
Japan’s PM Suga extended the state of emergency for ten prefectures until March 7.
USD/JPY keeps raising to fresh 2021 highs, holds above 105.00.

The USD/JPY pair kept reaching higher highs, hitting 105.16 this Tuesday, as dollar’s demand surged alongside equities. Investors cheered modest progress in US stimulus talks between President Joe Biden and Republican senators. Additionally, Democratic congressional leaders pushed forward a budget resolution, allowing them to pass Biden’s coronavirus relief bill without Republican support. US Treasury yields surged with the headline, which in turn boosted USD/JPY.

In Japan, Prime Minister Yoshihide Suga extended the state of emergency for ten prefectures until March 7, as the country battles its most serious wave of coronavirus infections yet. The country published the January Monetary Base, which improved by less than anticipated, printing at 18.9% YoY. Early on Wednesday, the country will publish the January Jibun Bank Services PMI, previously at 47.7.

USD/JPY short-term technical outlook

The USD/JPY pair is trading a couple of pips above the 105.00 threshold, up for a fifth consecutive day. The pair has room to extend to the upside, according to the 4-hour chart, as it keeps developing above all of its moving averages, with the 20 SMA maintaining its bullish slope above the larger ones. The Momentum indicator resumed its advance within positive levels, although it holds below its recent highs, while the RSI continues to consolidate in overbought readings.

Support levels: 104.85 104.40 103.95

Resistance levels: 105.20 105.50 105.90

View Live Chart for the USD/JPY

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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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