USD/JPY starts gathering upward momentum
Markets are starting to chase USD/JPY higher as risk tone improves, with potential tests of resistance looming.
Spot has topped resistance at 150.20 and set a new session high of 150.30 as Treasury yields firm across tenors and crosses move up with U.S. share prices. The pair eyes resistance at the Aug. 1 high of 150.88 should yields continue to rise.
Prior to its most recent advance, bullish option structures were being sold after a strong U.S. retail sales report and jobless claims sent spot above the key psychological level of 150. The bets largely see spot staying between 150 and 152 for at least the next week.
But the pace of the dollar’s climb appears to be quickening amid more signs that the U.S. economy remains resilient. U.S housing data next week offers the next set of clues as to how the US consumer is doing.
Ahead of those reports, Japan will release its nation CPI reading for September on Friday. The core annual reading is expected to slow to 2.3%. A higher-than-expected inflation number would fuel expectations of BOJ tightening and buoy the yen.
Until then, USD/JPY looks well supported with a close above 150 pointing to a test of the Ichimoku cloud top at 151.33.
For more click on FXBUZ
(Robert Fullem is a Reuters market analyst. The views expressed are his own.)
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