The USD/JPY currency pair has spiked over the last few trading session to trade within a touching distance of the 112.250 level. The pair’s bullish momentum looks set to continue into the new week, amid continued optimism in the US-China trade talks.
USD/JPY Fundamental Analysis
Asian markets opened the week on a bullish mode after reports emerged saying that the US and China were getting closer to agreeing on a breakthrough deal that could lift most if not all the trade tariffs placed on Chinese goods.
And looking ahead into the new week, traders will be watching closely for the non-farm payrolls data coming in later in the week, which could point the next direction for the USD/JPY currency pair. Continued positivity around the US-China trade talks is seen as a potential anchor to the momentum of the USD, while positive data from NFPs could trigger more uptrend.
USD/JPY Technical Analysis (the 240-min Chart)
From a technical perspective, the 240-min chart above seems to indicate that the USD/JPY currency pair’s current uptrend has hit the ceiling of the upward trending channel. As such, traders will be expecting a short-term pullback at least.
The pair has been trading within the bullish channel since the start of the year, and unless a pullback is on the cards, then a first breakout could be realized at some point this week. As such, the bulls will be targeting profits at around 112.250-112.500 level, while the bears will look at the most recent support at around 111.250 to pounce for profits.
USD/JPY Technical Analysis (the Daily Chart)
In the daily chart, the USD/JPY currency pair Fib retracements dating back April last year put the pair’s current position just below the 24.60% Fib level. This also coincides with the crucial target of 112.250 for the bulls while the bears will be targeting the 38.20% retracement level for profits should a pullback occur within the week.
In summary, the USD/JPY currency pair looks to enjoy a strong bullish momentum going into the first full week of the new month, and this could set the scene for what is to come in the next few weeks. Traders will look for signals from key fundamentals including the US NFP and the China trade talks, among others.