USD/JPY trades back above 104.00 and this time above some key trendline resistance levels stretching back all the way to last year
From a technical perspective, USD/JPY is looking rather intriguing at the moment as the pair broke above key trendline resistance levels stretching all the way back to last year in trading yesterday - even posting a daily close above that.
We're seeing some extension to that push as price touches a high of 104.38 today but there is the 100-day moving average (red line) @ 104.42 still in play for now.
That is a level that USD/JPY has not firmly traded above since June last year. As such, for sellers, that is arguably the last line of defense ahead of the weekend.
The pair is posting an advance as the dollar is firming across the board on risk averse tones and also as the market retraces further the moves seen in November and December - putting aside the narrative from the Fed yesterday.
While the technicals may suggest that the pair could be poised for a breakout to the topside as it keeps a break above the key trendline resistance levels and starts to challenge the 100-day moving average (red line), I'm not entirely convinced.
This could still end up being a false break in general as Treasury yields are very much uninspired at the moment. 10-year yields are flirting with a drop below 1% again and that is a more telling development for USD/JPY in my view.
It looks more of a question of how long can the pair ignore the divergence in the fundamentals before returning back to reality again.
