Contemporary Highs for USD/JPY as U.S. Greenback Advances

USD/JPY ANALYSIS

JAPANESE YEN FUNDAMENTAL BACKDROP

The U.S. Greenback rose yesterday throughout majors pushed by increased U.S. Treasury yields in addition to the flight to Greenback security after Archegos Capital made headline information. This pushed USD/JPY into unchartered territory for 2021 as bulls proceed their sturdy push increased.

The USD/JPY FX ballot (see chart under) is kind of attention-grabbing in that analysts predicted a median value of 103.85 with a “good” imply at 103.50 which locations extra weighting to the extra correct analysts. That is clearly fairly far-off from presently ranges however the total downward trajectory towards the tip of 2021 could also be one thing to bear in mind – this aligns nicely with the technical set-ups under.

USD/JPY FORECAST POLL

Chart ready by Warren Venketas, Refinitiv

USD/JPY ECONOMIC CALENDAR

Consideration will likely be on NFP knowledge on Friday however the remainder of the week is riddled with excessive influence occasions (U.S. particular). Eyes will likely be on President Biden’s speech tomorrow concerning funding of the $3 – $four trillion infrastructure plan. These occasions ought to end in important volatility pre and post-announcements so guaranteeing sound threat administration approach is important.

Supply: DailyFX Financial Calendar

USD/JPY TECHNICAL ANALYSIS

USD/JPY Weekly Chart:

Chart ready by Warren Venketas, IG

12 months-to-date the U.S. Greenback has appreciated 6.85% towards the Yen with U.S. treasury yields being the first contributor. The weekly chart above reveals value motion pushing above the long-term resistance trendline (black) and consequently the June 2020 excessive. The breach of the 110.00 psychological degree has not been current since March 2020. This being stated, theRelative Power Index (RSI) is in overbought territory which can recommend a possible value reversal to the draw back. This might carry the 109.85 assist zone again into focus. From the bullish perspective, the March 2020 excessive at 111.71 would function preliminary resistance.

The weekly candle shut must be a very good indicator of the short-term directional bias that’s, ought to the candle shut under trendline resistance (which coincides with the June 2020 excessive) then the current upside transfer might be coming to an finish. The other ought to ensue ought to the candle shut above these ranges, and additional room for a bullish run could comply with.

USD/JPY Every day Chart:

Chart ready by Warren Venketas, IG

Wanting on the shorter timeframe day by day chart, it’s evident from the lengthy decrease candle wicks (yesterday and right now) there may be value rejection across the 109.37 degree (blue). This might level to additional upside nonetheless, the RSI signifies bearish divergence as costs are rising whereas the momentum indicator is comparatively slower. This may increasingly result in a short-term reversal which might check the 109.85 assist adopted by the 109.37 value rejection zone.

Key technical factors to contemplate:

• 111.71 resistance goal
• 109.85 assist goal
• RSI bearish divergence

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IG CLIENT SENTIMENT SUPPORTIVE OF BEARISH REVERSAL

IGCS reveals retail merchants are presently internet lengthy on USD/JPY, with 43% of merchants presently holding lengthy positions (as of this writing) nonetheless, merchants are additional net-long than yesterday and final week, and the mix of present sentiment and up to date modifications provides us a stronger USD/JPY bearish contrarian buying and selling bias.

— Written by Warren Venketas for DailyFX.com

Contact and comply with Warren on Twitter: @WVenketas