Forex: USD/JPY Above 100.00 - What Now?

Includes: DIA, FXY, QQQ, SPY, UDN, UUP
by: FXstreet

The break above 100.00 in USD/JPY finally come in a dull trading Thursday, and with markets caught off guard. During the European session volume was thinner than usual, although the first signs of a dollar advanced appeared as U.S. yields gained even more ground today. That's after making their biggest one-day jump last Friday since January on better-than-expected U.S. NFP data.

However, as USD/JPY has been rejected several times on approaches to 100.00, market hopes of further advances were limited. That helped the panic dollar-buying across the board. Currently, the pair is trading at 100.60 and closing Thursday with 1.55% daily gains. According to the trend index, USD/JPY is slightly bullish in the one-hour chart. Indicators such as MACD, CCI, and momentum are pointing north, while the stochastic is bearish.

As for U.S. stocks, American indexes remain near their all-time highs with the DJIA and S&P hitting fresh all-time highs Thursday before closing a bit lower. The Nasdaq touched its highest levels since November 2000 before shedding 0.1%. The step back came after rumors the Fed will start tapering off bond buying, although nothing was confirmed. Regardless, indexes are up over 12% since the start of the year -- another strong sign of support for USD/JPY gains.

What Now?

With USD/JPY leaving behind the 100.00 mark, the first Abe milestone, and the pair reaching fresh four-year highs at 100.77, Chief Strategist Valeria Bednarik stated that the pair "trades above 100.70, establishing a fresh high since May 2009, and with no aims of retreating any. Market players are now eying 101.44, [the] April 2009 monthly high, and dips toward 99.70/100.00, if any, will be seen as strong buying opportunities."

But "be aware, pullbacks are highly unlikely in yen crosses," Bednarik pointed out. When looking at EUR/JPY, she added: "Former high around 130.40 is the level to watch as dips toward that area should see late buyers jumping into the bullish party. In bigger time frames, the upside is still favored with 133.60 now [in] sight."

Speaking about the EUR/JPY, Analyst Chris Tevere commented that the pair broke a triangle pattern fueled by the USD/JPY uptrend movement. "The triangle pattern is now confirmed, which projects a measured move objective of ~600 pips."

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.