USD/JPY bulls eye a break to 108 handle

• USD/JPY looking for a bod through the 107 handle.
• USD/JPY using 21-D SMA as support for higher grounds.

USD/JPY bulls have been tampering with the 107 handle but are not making any convincing ground around this level despite the backdrop of a solid bid in the recovery from 105.46 lows. USD/JPY is currently trading at 106.93 with a high of 106.97 and a low of 106.72.

USD/JPY improved on risk on appetite with a strong move in US stocks where investors have taken the positives from all current affairs in the markets such as the potential for a  looser Fed due to the wages miss, N.Korea and a more flexible Trump over tariffs. There is also less noise of a tighter BoJ that is making for a softer yen.

Intermarkets in focus

On Friday, the S&P 500 gapped higher on Friday, (VIX lowest since Feb 1st), after the strong headline beat, ( or Goldilocks result), while enjoying the combo of a strong economy and the less likelihood of a faster pace of tightening from the Fed. From here, the US CPI and retail sales are the main risk factors on the calendar for the week ahead.

"In the US, CPI and retail sales are probably the key releases. Interest rate markets imply that a rate hike at next week’s Fed policy meeting is effectively a done deal, but if there are major surprises in this week’s data, it could impact the outlook for meetings beyond March," analysts at Westpac explained.

USD/JPY levels

USD/JPY is back above the 21-D SMA (106.85) and for the first time since January 8th.107.20 is key and a break of this upper end of the range near JPY108 would be fruitful for the bulls.  110.85 is key ahead of and 111.44/50 as being a double Fibonacci retracement that is lining up with a lower and descending 200-D SMA at 111.30. The downside, 104.80 opens up territory with little chart support towards 100.70/99.00 on the charts.