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  • USD/JPY heads for highest close for the year supported by a stronger US dollar.
  • Greenback extends gains after US data and following yesterday’s FOMC rate hike.

The USD/JPY pair rose further during the American session and jumped to 113.30, reaching the highest levels since January 8. As of writing was holding near the highs, with the bullish tone strong.

The move to the upside took place amid higher US yields and US equities. The Dow Jones was rising 0.45% and the 10-year yield climbed to 3.06%. The main driver was US economic data and monetary policy expectations. The final Q2 GDP print stood at 4.2% (annualized rate), durable goods orders surpassed expectations with a gain of 4.5% (m/m) in August. The negative print came from housing data with a larger-than-expected slide in pending home sales of 1.8% against an expected -0.4%.

“Between Chairman Powell’s comment yesterday the that the U.S. economy is in a particularly good spot and today’s robust durable good orders and excellent business spending, despite the August pause the six months to July saw the strongest investment spending in five years, the dollar has room to run on the American economy alone”, said Joseph Trevisani, Senior Analyst at FXStreet.

Levels to watch

USD/JPY is testing the 113.30 resistance, a consolidation on top could clear the way for a test of the next barrier seen at 113.70/75 (Dec 2017 high) followed by 114.00. On the flip side, the bullish momentum would ease with a slide back under 113.00, but the yen needs a confirmation under 112.60 to remove the current short-term bias that favors the greenback.