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USD/JPY added to its weekly gains and edged higher for the third consecutive session on Friday. A bullish flag breakout is in play, with the pair seeing fresh multi-month tops and counting but slightly overbought RSI on the daily chart might cap gains amid a subdued USD price action, FXStreet’s Haresh Menghani reports.

See –  USD/JPY: Break above 109.30/40 to leave the 110.00 psychological level in play – OCBC

Key quotes  

“Market participants now look forward to the US economic docket, featuring the releases of Personal Income/Spending figures, Core PCE Price Index and revised Michigan Consumer Sentiment index. The data could provide further hints about the US economic strength, which, along with the US bond yields, might influence the USD.”

“The USD/JPY pair on Thursday confirmed a fresh bullish breakout through a flag chart pattern and seems poised to prolong the recent strong upward trajectory. However, RSI (14) on the daily chart is still holding in the overbought territory and warrants some caution before positioning for any further appreciating move.”

“Immediate resistance is pegged near May 2020 swing highs, around the 109.80-85 region. This is closely followed by the key 110.00 psychological mark. Some follow-through buying should pave the way for a move towards the next relevant hurdle near the 110.75-80 supply zone.”

“The descending channel resistance breakpoint, currently near the 109.00 mark now seems to protect the immediate downside. Any subsequent slide might be seen as a buying opportunity near the 108.60-55 region, which should now act as a strong near-term base for the major.”