USD/JPY climbs to key level on stronger US data

Today’s stronger-than-expected US ISM Non-Manufacturing PMI and New Home Sales data both helped to drive the dollar higher, which caused the USD/JPY to hit a fresh 2019 high.

Today’s stronger-than-expected US ISM Non-Manufacturing PMI and New Home Sales data both helped to drive the dollar higher, which caused the USD/JPY to hit a fresh 2019 high. But with stocks struggling over the past day and a half, and the always-important US jobs report coming up on Friday, it will be interesting to observe where this risk-sensitive pair is headed.

Technically, with the RSI nearing the ‘overbought’ territory and price hitting 112.10 prior support, we wouldn’t be surprised if rates were to ease back a little from around here. Some of the important short-term levels we are currently watching are:

  • 110.50: the 200-day moving average (potential support)
  • 111.05: base of the recent breakout (potential support)
  • 112.10: last support prior to breakdown on Dec 20 (potential resistance)
  • 112.50: the 78.6% Fibonacci retracement (potential resistance)
At this stage, if the USD/JPY does pullback, we are only anticipating a moderate retracement, given the trend being bullish. However, should the USD/JPY eventually drop to create a lower low beneath its most recent low at 110.35, then in that case, we would turn decidedly bearish. 

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