FXStreet (Guatemala) – USD/JPY is currently trading at 124.05 with a high of 124.07 and low of 122.77.
USD/JPY has flexed its muscles yet again and continues under the hat of the bulls, now taking out stop territory and on to the 124 handle. Dollar strength in FX markets continues with the dollar index now approaching the 61.8% Fib retracement of the fall seen from mid-March to mid-May at 97.61.
There are fundamentals at work and risk events that are favouring the greenback. USD/JPY got the extra boost on the London fix earlier today that bought demand for the US dollar and up to stop territory and resistance which is now being tested. Failures to continue here though may attract corporate flows and hedging around month end requirements also, so there could be larger moves to come one way or the other.
There is a downside bias to the Yen which is going the way the BoJ need, some risk there within the G7 although more fundamental, pinning the major to the bid was the IMF calling for the reinforcement of all three arrows of Abenomics. The recent release of the Bank of Japan Minutes from April 30 echoed the usual with Central Banks intentions to continue easing until 2% inflation stable.
Meanwhile, there had also been evidence in the recent data from the CFTC Commitment of Traders Report for the week ending Tuesday May 19, that institutional investors had started to commit once again into Yen short bets, as written yesterday by Ivan Delgado, Head of Asian Editors.
USD/JPY bull run fully in place, carving out a new range?
The bullish triangle was confirmed with the break out up to test the 123.20/30 resistance zone and now we look to the June 2007 highs at 124.14. A new range is being drawn in the ground here and with 125 coming as the next psychological level. A pull back and buying on dips would leave the pair in to a consolidation phase but 123.30 support would keep the new bullish range in place. a drop below here would likely signal that we are not out of the woods yet and leave us back in familiar territory in a premature move by the bulls.
(Market News Provided by FXstreet)