USD/JPY a key one to watch as the market keeps the focus on the reflation narrative

Technical Analysis

Author: Justin Low | usdjpy

USD/JPY runs up against a test of its 200-day moving average again

USD/JPY D1 16-02
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With yields keeping higher, this is one chart to watch in gauging yen sentiment in general as we look towards the trading week ahead.

The market is looking to keep the focus on the reflation narrative with Wall Street returning back into action today and that will put a keen focus on USD/JPY in particular as the pair now runs up against key technical resistance once again.

The 200-day moving average (blue line) limited gains on 5 and 8 February before price fell back towards the 100-day moving average (red line) and catching a bounce there.

The high today hit 105.63 but buyers are lacking some follow through for now as price dips back just below 105.50 and the 200-day moving average @ 105.51.

Hold a break above that and short-term resistance around 105.67-77 and buyers have a relatively clear path to chase the next leg higher in the pair.

That said, a lot will hinge on how sustainable is the latest shove higher in yields.

But from a technical perspective, a break higher here will lend itself to further momentum across yen pairs in general with AUD/JPY already trading to its highest levels since December 2018 - targeting the high at the time around 83.93.

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