USD/JPY: Bulls in control, charging towards 118.00

The bullish momentum behind the US dollar accelerates in early Europe, now pushing USD/JPY further beyond the mid-point of 117 handle.

Extension of Friday’s rally in the greenback versus its main peers, in wake of a wage-price growth in the US, bolstered the bids behind USD/JPY. While increased odds of a March Fed rate hike kept the sentiment around the treasury yields underpinned, which in turn fuelled a fresh rally in the major during the holiday-thinned Asian trading.

Additionally, data published by the US CFTC on Friday, revealed that CME leveraged funds extended JPY net shorts to -73k contracts in week to 3 Jan, the most since Dec 2015. This news also appears to have weighed on the Yen markets.

The pair is last seen exchanging hands at 117.45, up +0.35% on the day, having posted session tops at 117.53 last minutes.  Looking ahead, markets await the US LMCI and speeches from Fed’s Rosengren and Lockhart due later in the American session.

USD/JPY Technical levels to watch 

The major finds immediate resistance at 118 (round figure). A break above the last, the major could test 118.19 (Jan 4 high) and 118.50 (key resistance) beyond the last. While to the downside, the immediate support is seen at 116.94 (10-DMA) next at 116.78 (5-DMA) and below that at 116.50 (psychological levels).