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USD/JPY clings to strong gains near 1-week tops, comfortable above 113.00 handle

2018-11-26 17:54:10Trading Strategies
USD/JPY clings to strong gains near 1-week tops, comfortable above 113.00 handle

The USD/JPY pair caught some aggressive bids at the start of a new trading week and climbed over one-week tops during the Asian session.


The pair built on last week's goodish rebound from monthly lows, with a combination of factors weighing heavily on the Japanese Yen and pushing the pair further beyond the 113.00 handle. 


A slight improvement in investors' appetite for riskier assets, supported by an uptick in the US equity index futures, turned out to be one of the key factors driving flows away from perceived safe-haven currencies, including the Japanese Yen.


This coupled with today's disappointing Japanese manufacturing PMI print, which fell to 51.8 in November - the slowest pace in two years, exerted some additional downward pressure on the domestic currency and remained supportive of the pair's strong up-move.


Meanwhile, a subdued US Dollar price action did little to provide any additional boost and was seen as the only factor keeping a lid on any runaway rally, at least for the time being.


In absence of any major market moving economic releases from the US, the broader market risk sentiment might continue to act as an exclusive driver of the pair's momentum through Monday’s trading session.


Technical outlook


Omkar Godbole, FXStreet's own Analyst and Editor write: “The MACD's bearish turn could be considered a sign that the rally from the March low of 104.57 has likely ended at 114.55 and the bears have regained control. As a result, the crucial support of the 100-day simple moving average (SMA), currently at 112.15, could soon come into play.”


“A daily close below the 100-day SMA would validate the bull-to-bear trend change signaled by the MACD and open the doors for a drop below the psychological support of 110.00,” he added further.