- Higher US stock prices and yields weigh on the Japanese yen.
- US economic data released Tuesday beat expectations.
- USD / JPY breaks through key resistance and strengthens the positive outlook.
The USD/JPY it broke above 114.30 and jumped to test multi-year highs below 114.70. It peaked at 114.63, the strongest level in four weeks, and then declined modestly. The combination of rising US yields, rising equity prices and a rally in the dollar across the board continues to propel the pair.
US economic data released on Tuesday beat expectations (retail sales and industrial production) and boosted US yields. The 10-year Treasury yield reached 1.63%, before falling back.
The economic figures show an improvement in economic activity that fuels expectations of a tightening of the Federal Reserve’s monetary policy earlier than expected. The numbers also help the dollar which is rising sharply. DXY is at fresh 16-month highs above 95.10, up 0.20% on the day.
Short-term outlook for USD / JPY
The USD / JPY pair is trading near the zone of multi-year highs around 114.70. As long as it is above 114.40, the bullish tone will remain intact and another test of the recent high seems likely. A break above should clear the way for more gains.
A pullback below 114.30 would put USD / JPY back in the range between 114.30 and 113.40, with an intermediate level at 113.75.
Technical levels
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