USD/JPY Shows Strength, Resistance Ahead At 110.00

The USD is having a solid open to the trading week. Led by gains against the Euro, Swiss franc, and Japanese yen, the Greenback is riding a wave of optimism. Today’s bullish sentiment is a result of the U.S. Core Personal Consumption number coming in right on schedule at 1.9%.

Consumer spending is up, U.S. GDP is growing, and the FED appears poised to continue its plan of “gradual tightening.” Early week strength by the USD may bring a key level into play for the USD/JPY. Let’s dig into the technicals and check out a trade or two.

USD/JPY Technical Outlook

Last Thursday and Friday had the USD/JPY posting a moderate retracement of the recent bull run. Today’s action has been a continuation of the prevailing trend.

There are two levels on my radar for the near future:

• Resistance(1): 62% Retracement Jan. High/ March Low, 110.03
• Support(1): 38% Retracement Current Wave, 108.52

For the USD/JPY, several factors contribute to a bullish bias. First, price failed to penetrate the 38% retracement at 108.52. Secondly, price is extending to the bull on longer time frames, specifically the monthly and weekly charts.

Add it all up — the USD/JPY is on a collision course with the 110.00 handle.

Bottom Line: As the week unfolds, I will be looking for the recent uptrend to slow down dramatically between 109.75 and 110.50. Sells from 109.94 with an initial stop at 110.26 produce 30+ pips using a 1:1 risk vs reward management plan.

A possible short position trade may set up between 109.75 and 110.50 later in the week. If this scenario plays out, be on the watch for a Live Market Update breaking down the action.

ABOUT THE AUTHOR See More

Shain Vernier

US Analyst

Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.

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