Initially, the USD/JPY tumbled on Friday’s payroll report, falling 30 points to 111.51, but within an hour the pair had soared to the week’s high at 112.00, before stabilizing near 111.85. The break of 112.00 just before the London close, and the continued gains in US Treasury yields portend further gains for the USD/JPY. The Federal Reserve’s pending bond taper and the resulting higher Treasury rates are the main order of market business. The USD/JPY will continue to rise as long as Treasury yields push higher.

Despite the dismal September job numbers, markets remain convinced that the Fed will keep its word and begin a bond program reduction this year.

The USD/JPY is close to the top of its three year range. Except for the February and March 2020 panic spikes, and a few days in April 2019, the last time the pair spent any time above 112.00 was in the second half of 2018. The area above 112.00 has no technical impediments to a rise in the USD/JPY.

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

The week's gains and especially the move above 112.00 on Friday have give the momentum indicators a strong positive aspect. The MACD (Moving Average Convergence Divergence) is at its highest level since mid-April. The Relative Strength Index (RSI) nearly reached overbought on Friday, as it was on September 29 after the steep ascent from 109.00. True Range revived following a mid-week decline. The upward inflection of the 21-day, 50-day and 100-day moving averages (MA), after the USD/JPY crossed 110.00 on September 23 has been predictive of its subsequent rise. The near parallel of the 50 and 100 day averages and their slope are an indicator of strong upward momentum. Support and resistance lines are highly unblanced. Support is recent and well-traded, though much less so above 111.00. There are no resistance references above 112.00 closer than December 2018 making the upside far more vulnerable.

USDJPY

Oct 09 2021