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The USD/JPY was the standout in a week of middling dollar performance, rising in the three mid-week sessions and consolidating those gains on Friday, finishing above 106.00 for only the second time since early October. Technical momentum is shifting higher while moving averages are forming firm support, FXStreet’s Analyst Joseph Trevisani briefs.

Key quotes

“The sharp rise in real interest rates in the US (yield-inflation) has been the largest factor in the ascent of the USD/JPY this year. There has been no indication from the US Federal Reserve that it is concerned about the increase in medium to long-term yields, even as Chairman Jerome Powell promises to keep rates low until the recovery is complete. These gains are an accurate representation of the prospects for the American economy.”

“The 21-day average at 105.33 and the 200-day at 105.45 reinforce support at 105.40. The 100-day average is at 104.40.”

“Crossing the 200-day average on Wednesday represents the long-term shift higher in the USD/JPY and is the most significant of the three averages that moved from resistance to support in this breakout.”

“The Relative Strength Index at 69.02 borders overbought territory but, given the steepness of the ascent is probably not yet a sell signal. The resistance at 107.00 is the most substantial as it coincides with the 50% Fibonacci but it will likely be challenged early in the coming week.”


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