USD/JPY: Optimism hits the yen, further gains above 106.70

An upbeat market mood is lifting USD/JPY, which now trades at daily highs in the 106.40 price zone. The pair is bullish in the short-term with support seen at 106.30, as FXStreet’s Chief Analyst Valeria Bednarik notes.

Key quotes

“Support is coming from US Treasury yields, surging ahead of the US opening, reflecting the market’s optimism. Equities, on the other hand, are not doing that good after Monday's stellar performance. European indexes are just marginally higher, while US ones hold on to yesterday gains. In general, the greenback is weaker against most major rivals, except those considered safe-havens.”

“USD/JPY is now above the 61.8% retracement of its latest daily decline, measured between 107.04 and 105.09, at 106.29. In the 4-hour chart, the pair has rallied above all of its moving averages, which anyway lack clear directional strength. Technical indicators, in the meantime, advanced within positive levels, partially losing their bullish strength but still heading north.”

“Further gains are expected on a break above 106.70, the immediate resistance, towards fresh monthly highs beyond 107.05.”