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USDJPY moves above 107 to trade near 6-week high

Summary:

  • USDJPY breaks back above the 107 handle
  • USD rising against most pairs and risk sentiment also providing a boost
  • Market remains under pressure unless 108 can be recaptured

The US dollar is on course for its largest day of gains this week, with the buck rising against the majority of its peers. Only the BRL and MXN have risen against the greenback out of all traditional currencies today. Whilst it should be pointed out that most of the gains aren’t that large the broad nature of the rise will be pleasing to USD bulls.

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 The US dollar is enjoying a broad, albeit it measured, move higher so far today. Source: xStation

With stocks also in the green, the USDJPY has received a twin boost as the risk-on sentiment that often supports this pair is adding to the strength of the buck. The cross has broken back above the 107 handle in the last hour and is currently trading close to a 6-week high. The pair has rallied around 170 pips from the lows seen at the start of the week with 2 significant breaks of short term resistance offering nice entries around 106.65 and 106.98. These could now be viewed as possible support if they are retested from above - as the 106.98 has and it stood firm attracting buyers. 

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 USDJPY has rallied impressively in recent days with a series of breaks higher. Source: xStation

A falling channel dating back to early February appears to have been decisively broken above today but the market remains in a longer term downtrend. The 108.15 level had previously acted as support on a couple of occasions and even though there was a false break below it last summer, it remains a potentially key swing level to keep an eye on. Longs will want to see price close back above 108.15 before they get further confirmation that the downtrend is over, whilst shorts may look for reversal signals on shorter time frames around the 108.15 region to look for entry opportunities. 

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 Even though the market has broken out to the upside of a falling channel today  it remains below the key swing level around 108.15. Source: xStation

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