- USD/JPY spiked past 20-DMA overnight supported by rising UST yields.
- Yen demand rising in early Asia after N. Korea's latest threat to accelerate its plans to acquire a nuclear weapon, following new sanctions imposed by the UN.
- USD/JPY retreats from 2-week highs at 110.25 and is currently hovering around 110 levels.
- Bullish divergence keeps scope for upside. Technical studies have turned bullish.
- The pair has broken 20-DMA at 109.41, bias higher, we see scope for test of 110.60 (50-DMA).
- Violation at 50-DMA could accentuate upside, we will then see further upside till 111 levels.
- Key US inflation readings (due Thursday) will be in focus for fresh clues over the timing of next Fed rate hike move and eventually further direction in the pair.
Support levels - 109.40 (20-DMA), 109.17 (5-DMA), 109 (23.6% Fib retrace of 114.49 to 107.31 fall), 108.40 (trendline support)
Resistance levels - 109.60 (50-DMA), 110, 110.90 (50% Fib)
Call update: Our previous call (http://www.econotimes.com/FxWirePro-USD-JPY-confined-to-narrow-range-consolidates-overnight-surge-focus-on-US-inflation-data-for-further-impetus-893870) has hit TP1.
Recommendation: Book partial profits, hold for upside.
FxWirePro Currency Strength Index: FxWirePro's Hourly USD Spot Index was at 55.6274 (Neutral), while Hourly JPY Spot Index was at -99.3512 (Bearish) at 0420 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.
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