USD/JPY Surges to New Rally Highs

USD/JPY has broken out to new rally highs in today’s trading, with the pair currently trading at 114.28, up 1.7%. The pair is higher as the dollar is advancing following a round of strong US economic data.

As a result of today’s move to the upside, USD/JYP is testing the next level of resistance at the highs established in mid-February and early March, near the 114.445-114.876 zone. On a break above this level, the next target for the pair is at the 116.00 level.

With today’s move higher, extreme overbought conditions are once again a factor. This, combined with the close proximity of resistance, could result in a near term period of consolidation over the near term.

On a move to the downside, first support is now at the former rally peak, at November 25th’s 113.90 high. Holding this level on a move to the downside would be considered a sign of strength and keep the pair well-positioned for a resumption of the advance.

On a move below this level, the target becomes the November 28th low at 111.36, which represents a test of the corrective top established in late May. A return to this level would result in no technical damage to USD/JPY, keeping the broader bias in the pair to the upside.

USD/JPY Daily Chart

USDJPY_113016_2

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Tracy L. Morganthall, CMT, has been a Technical Market Analyst for more than 20 years. She has experience analyzing and producing reports on equities, both domestic and international markets, as well as Forex and commodities. She attended Trenton State College in Trenton, New Jersey, earning a Bachelor's in Finance.