The currency pair rallies aggressively and could hit the 110.00 psychological level in the upcoming hours if the USDX and the Nikkei stock index will climb higher.

The USD is boosted by the USDX’s rally, while the Yen is ruined by the Nikkei’s increase. USD/JPY has finally managed to breakout above some very important resistance levels and now seems determined to resume the upside movement.

Price increased and tries to recover after the last night decrease. It is almost to reach the 109.19 yesterday’s high. It should climb much higher in the upcoming period as the rate is located in the buyer’s territory.

The Yen was punished by the Japanese All Industries Activity, which has increased only by 0.4% in February, less versus the 0.6% estimate.

The JP225 increased significantly in the morning and tries to recover after the yesterday’s major drop. The index has found temporary resistance at the median line (ml) of the ascending pitchfork. It has failed once again to make a valid breakout above this dynamic resistance. Technically, it could come back down towards the lower median line (lml) of the minor ascending pitchfork.

You should know that a minor drop will force the Yen to increase again on the short term. Only a further increase towards the upper median line (UML) will punish the Japanese currency.

The rate has finally managed to breakout above the fourth warning line (WL4) of the former descending pitchfork. I’ve said in the last weeks that we may have an important upside movement if the rate will make a valid breakout above the WL4.

The next major upside target will be at the first warning line (wl1) of the ascending pitchfork. Personally, I’m still expecting the rate to decrease a little in the upcoming period before will try to move towards the 23.6% retracement level.

The current upside movement will be a temporary one if the Nikkei will plunge again after the current rebound.