- USD / JPY gains traction for the second day in a row and rises to one-week highs.
- The bulls await a sustained move above the trading range resistance before opening new positions.
The USD / JPY pair extends the positive move from the previous day and gains some continuation traction for the second day in a row on Thursday. Momentum has pushed the pair to week-long highs, around the 110.20-25 region, during the first half of the European session on Thursday.
Optimism that the continued rise in new coronavirus cases will not derail the global economic recovery has continued to weigh on the demand for the safe-haven Japanese yen. The pair’s bulls also took cues from the recent strong upward movement in US Treasury yields. This, coupled with a nice rally in demand for the US dollar, has provided an additional boost to the USD / JPY pair.
From a technical perspective, the 110.20-25 area marks the upper limit of a short-term trading range held in the last week. A sustained move above this region will be seen as a new trigger for the bulls and will set the stage for additional gains. The USD / JPY pair could then aspire to break above the monthly highs around the 110.80 region and regain the 111.00 level.
Meanwhile, the technical indicators on the 1 hour chart have maintained their positive bias and have just started to gain traction on the daily chart. The technical setup supports the outlook for an eventual breakout to the upside. With that said, it will still be wise to wait for a sustained move past the range hurdle before positioning for any further bullish moves.
On the other hand, any significant drop below the key psychological level of 110.00 could still find decent support near the horizontal level of 109.75. This is followed by the lower bound of the mentioned range, around 109.50. Sustained weakness below will shift the short-term bias in favor of the bears and trigger some technical selling around the USD / JPY pair.
The next major support is near the 109.10 area ahead of the round 109.00 level. The downward movement could widen further and drag USD / JPY towards monthly lows, around the 108.70 region they touched on August 4.
USD / JPY 1 hour chart
USD / JPY technical levels
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