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USD/JPY continued its consolidation in the early part of the last week staying below 109.25 resistance, but Thursday’s finish just below this level set the stage for an easy traverse on Friday and a straight run to the 12-month high. According to FXStreet’s Analyst Joseph Trevisani, as long as the rate divergence between the US and Japan continues to widen, the USD/JPY will rise.  

Key quotes

“If the US economy performs as forecast, Treasury rates could move substantially higher. With the BOJ committed to its dead-end and seemingly permanent zero rate policy, which inhibits Japan’s economic recovery rather than helping it, the yen will stay on the defensive for the immediate future.”

“The area above 110.00 was heavily traded from late 2016 until the middle of 2019 and the lower levels will present many opportunities for profit-taking.”

“The two nearest resistance lines at 110.00 and 110.30 are from January 2020 and of lightweight. Resistance above 110.30 will be much harder to breach and a return to the base at 109.20 would not obviate the upward momentum. Only a return to the 108.60-109.20 range would blunt the overall direction.”

“The Relative Strength Index at 75.70 is overbought but as long as the pair stays above 109.20, not a sell signal. The nearest moving average (MV) at 108.39 adds to support at 108.30.”