USD/JPY rises to test daily highs

USD/JPY rose back toward the 104.60 and is testing daily highs as US equity prices extend gains. 

The pair pulled back earlier from 104.62, the highest level in six days, and found support at 104.20/25. Currently, it trades at 104.55, 150 pips above Friday’s closing price. 

USD/JPY opened the week with a significant bullish gap that is still open and continues to hold an upside bias. Risk appetite weakened the demand for the yen. The Dow Jones is up more than 300 pips, 1.89%. In a few hours, the index erased last week losses. 

The announcement that the FBI decided not to take actions against Clinton in the email case and the latest polls showing her ahead in the election, gave support to the markets and also the US dollar against the Euro, the Pound and the Yen. In the bond market, yields are rising, with the 10-year bond at 1.83%, the highest since last Wednesday. 

Technical levels 

To the upside, resistance levels could be seen at 104.60/65 (daily high), 105.10 (Nov 01 high) and 105.55 (Oct 28 high). On the opposite direction, support might lie at 104.25 (American session low / 20-hour moving average) and 103.75/80 (Nov 01 low). 

To learn more about this topic, check our video analysis.