FxWirePro: USD/JPY hits fresh 2-month high, further gains likely on monetary policy divergence

• USD/JPY edges higher to hit 2-month high on 114.20 on Fed-BOJ monetary policy divergence.
   
• Friday’s solid NFP data boosted Dec rate hike bets, and also suggested the Fed would announce that it is prepared to reduce its balance sheet size.
   
• On the other side, the Bank of Japan on Friday, boosted its bond purchases in order to keep the 10-year yield near zero percent as under its yield curve control policy. 
   
• Yen also dented by lower than expected current account, core machinery orders data released today.
   
• Technical studies are bullish on daily charts, RSI is biased higher and remains strong at 72 levels. 
   
• However, momentum indicators are at overbought levels, so caution advised.
   
• Upside has broken consolidation phase after break of Symmetric Triangle pattern, we see scope for test of 61.8% Fib at 114.63.
   
• The pair finds strong support at 111.78 (100-DMA), and only break below could see reversal of trend.
   

Support levels - 113.56 (5-DMA), 112.50 (trendline), 112.15 (38.2% Fib retrace of 118.662 to 108.130 fall), 111.78 (100-DMA)

Resistance levels - 114.63 (61.8% Fib), 115, 115.50 (March 10 high)

Call update: Our previous call (http://www.econotimes.com/FxWirePro-USD-JPY-consolidates-breakout-above-symmetric-triangle-bias-higher-792050) has hit TP1.

Recommendation: Bias higher, stay long for 114.63. Violation there could see further upside.

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