Upbeat data as well as cautious optimism about the US-China trade deal is sending the US Dollar higher against the safe haven Japanese Yen. The USDJPY is now trading at 109.51, just a tad off Monday’s intraday highs.
Investors are studying the US-China trade deal intently and even though the initial lettering suggest the deal did not go as far as many had hoped, it was still seen as a positive sign. Furthermore, upbeat data from China is giving the US markets a strong impetus this Monday, pushing the Dow Jones index into all-time high territory. China’s Industrial Production and Retail Sales data all beat market expectations, fuelling hopes that the two economies involved in the trade war would soon start to see a pickup in economic growth.
The USDJPY pair may be higher today, but it is actually pushing towards the top of the intraday range which is showcased by the Bollinger band indicator. So far, the markets are showing cautious optimism as they seek to get clarity on the technical and legal aspects of the limited US-China trade deal. This may translate into limited upside for the pair as it approaches the upper end of its intraday range.
The Stochastics oscillator continues to push towards the upper market extreme. It is not yet overbought, and this points to room for further upside.
A break above the 109.54 resistance level takes the USDJPY towards the immediate upside target of 110.51, with a pitstop at 109.92, where previous lows of March 25 as well as previous highs of May 3 exist.
On the flip side, price pullback from the present resistance level could retest the immediate support at the lower Bollinger band at around 108.40, with potential for further downside towards 108.07 if there is strong downside momentum.