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  • DXY hits fresh two month highs even as US yields decline.
  • USD/JPY about to end the week on a positive note, rebounding sharply from six-month lows.

The USD/JPY pair broke above 105.50/55 and jumped to 105.69, reaching the highest level since September 15. The pair is rising for the fifth trading day in a row and is trading at 105.65, slightly above the 20-day moving average.

A rally of the US dollar across the board boosted the USD/JPY. There was no catalyst fueling the rally. The US Dollar Index rose above 94.70, to the highest since July. At the same time, the US 10-year yield fell to 0.65%. In Wall Street, the Dow Jones is losing 0.18%, and the Nasdaq gains 0.38%.

A strong week for USD/JPY

On Monday, the dollar dropped to 103.99, the lowest intraday level since March. Since then, it gained more than 250 pips, making a strong recovery but not enough to erase last week losses.

The short-term trend still points to the downside. The bounce alleviated the pressure. On the upside, the dollar needs to rise clearly above 106.60 (20-week moving average) to change the bias.

On the downside, the area around 104.00/30 in USD/JPY has become a key support that capped the downside several times since March. A break lower would clear the way to a bearish acceleration.

Technical levels