• Bulls remain in control for the fifth consecutive session on Friday.
• Renewed USD buying interest remains supportive of the up-move.
• Technical buying could accelerate the up-move during NY session.
The USD/JPY pair held on to its strong gains through the mid-European session, albeit seemed struggling to build on the gains further beyond the 111.00 handle.
The ongoing bullish momentum, being witnessed since the beginning of this week, remained uninterrupted on Friday and got an additional boost from today’s softer Japanese Core CPI print for the month of April.
This coupled with some renewed USD buying interest remained supportive of the pair’s strong bid tone for the fifth consecutive session. After a brief pause, a fresh wave of greenback buying interest emerged since the early European session and lifted the key US Dollar Index to fresh 5-month tops, around mid-93.00s in the last hour.
Meanwhile, a subdued action around the US Treasury bond yields, to a larger extent, was negated by the prevalent cautious sentiment in the European equity markets, which tends to underpin the Japanese Yen’s safe-haven appeal, and did little to dent the positive mood.
There aren’t any major market-moving economic releases due from the US and hence, an extension of the up-move, led by some fresh technical buying above the 111.00 handle, now looks a distinct possibility. Later in the day, a scheduled speech by the Fed Governor Lael Brainard might influence the USD price dynamics and eventually provide some fresh impetus.
Technical levels to watch
A follow-through buying interest has the potential to continue lifting the pair further towards 111.25-30 supply zone en-route mid-111.00s. On the flip side, 110.70 level now seems to protect the immediate downside, which if broken might prompt some profit-taking and accelerate the corrective slide back towards the very important 200-day SMA, resistance turned support, currently near the 110.15 region.