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USDJPY driven higher with yields helping the bias

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Higher yields push the dollar higher

The USDJPY fell in the early Asian session and in the process fell back below its 100 day moving average at 109.724. That break was short-lived however, and the sellers turned the buyers.

Higher yields push the dollar higher

Higher interest rates have helped to support the dollar, and in the process, push the USDJPY higher.  

The pair moved back above its 100/200 hour moving averages (blue and green lines) which are trading near each other between 109.902 and 109.940. 

Initial resistance was found against a trendline connecting most recent highs from September 1, September 2, and September 3 (see red numbered circles). Sellers initially leaned against that trendline but ultimately that trendline was broken over the last few hours and the price has squeezed higher. The 50% midpoint of the move down from last week’s high to last week’s low comes in near 110.00. Stay above the midpoint and the broken trendline would tilt the bias more to the upside at least in the short term.

The high today reach 110.17 so far. That was short of swing area resistance between 110.222 to 110.263 (see green numbered circles). 

What next the pair? 

With the price trading above the 50% and the broken trendline, the tilt is a little more to the bullish side. Stay above those levels keeps the buyers more in control. On the topside, the 110.22  to 110.263  would be the next targets.  A move above that area would have traders looking toward the swing high from September 1 at 110.414. That was the highest level since August 13.

Taking a broader look, the pair now has been in a fairly narrow range of about 100 pips going back to August 17 (that’s about 15 trading days). The price action has been up and down with most of the activity between 109.56 and 110.263. The extensions above to 110.414 and below to 109.407 were short lived.  

So traders are still unsure of the directional bias (or better put… have more to prove).  Nevertheless in the short term, with the move above the trendline and away from the 100/200 hour moving averages, the buyers are making a bigger play.  Can they keep that momentum going and extend above the topside extremes? That is what traders will be eyeing now.

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