- Summary:
- USDJPY tapped its 8-week highs as the USD's strength spilled over from yesterday's trading. However, technicals suggest it is now struggling to find bids.
USDJPY is trading at is highest levels since April 10 as the dollar’s bullish momentum carried over from yesterday’s trading. The currency pair earlier peaked at 108.84 before it steadied at 108.56.
The dollar strength against the yen yesterday was driven by the uptick in US equities. Stock markets in the US performed strongly despite protests breaking out in more than 30 cities in the US. Consequently, the rise in equities translated to an uptick in USDJPY too. The question is, can it extend its gains?
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USDJPY Outlook
On the 4-hour time frame, it can be seen that USDJPY is struggling to find bids around 108.65. With the current candle ticking lower, it can be assumed that sellers are weighing down on the currency pair. If this is true, we could soon see USDJPY fall to near-term support around 107.75. This price offers a confluence of support. First, the rising trendline coincides with this price when you connect the lows of May 6 and May 29. Second, this area also aligns with the 61.8% Fib level when you draw the Fibonacci retracement tool from the low of May 29 to the high of June 3.
On the other hand, a strong close above today’s highs at 108.84 could mean that USDJPY may still have enough buyers left in the market. Should this happen, the currency pair may soon rally to its April 6 highs at 109.37.