TECHNICAL ANALYSIS

USD / JPY is a key item to watch as the market remains focused on the reflation narrative


USD / JPY hits a test of its 200-day moving average again

USD / JPY D1 16-02
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With yields remaining higher, this is a chart to watch to gauge overall yen sentiment as we look into the coming trading week.

The market is looking to stay focused on the reflation narrative with Wall Street returning to action today, which will put a particular focus on USD / JPY in particular as the pair faces technical resistance again. key.

The 200-day moving average (blue line) limited gains on February 5 and 8 before the price fell back to the 100-day moving average (red line) and caught a rebound there.

Today’s high hit 105.63, but buyers lack follow-through for now as price drops back to just below 105.50 and the 200 day moving average @ 105.51.

Maintain a break above and short term resistance around 105.67-77 and the buyers have a relatively clear path to chase the next higher leg of the pair.

That said, a lot will depend on the sustainability of the latest increase in yields.

But from a technical standpoint, a higher breakout here will lend itself to further momentum between yen pairs in general, with AUD / JPY already trading at its highest levels since December 2018 – aiming for the highest of the time around 83.93.

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