- Stronger USD assisted USD/JPY to recover further from monthly lows touched earlier this week.
- A strong pickup in the US bond yields was seen as a key factor that underpinned the greenback.
- The set-up seems tilted in favour of bullish traders and supports prospects for additional gains.
The USD/JPY pair gained strong positive traction on the last trading day of the week and climbed to levels beyond the key 105.00 psychological mark, or three-day tops. Bulls, however, seemed struggling to find acceptance above 200-hour SMA and the momentum stalled near the 50% Fibonacci level of the 105.77-104.41 recent downfall.
Slightly overstretched RSI on the 1-hourly charts seemed to be the only factor holding bullish traders from placing fresh bets. Meanwhile, technical indicators on 4-hourly/daily charts have been gaining positive traction and are still far from being in the overbought conditions, supporting prospects for additional near-term gains.
The constructive outlook is further reinforced by a goodish pickup in the US Treasury bond yields, which underpinned the US dollar demand. Hence, a subsequent strength towards the 105.55 intermediate resistance, en-route multi-month tops, around the 105.75 region touched earlier this month, looks a distinct possibility.
On the flip side, immediate support is pegged near the 104.80 horizontal zone ahead of monthly swing lows, around the 104.40 region. Failure to defend the mentioned support levels will negate the bullish bias and prompt some aggressive technical selling. The USD/JPY pair might then turn vulnerable to test sub-104.00 levels.
USD/JPY 1-hourly chart
Technical levels to watch
