USD/JPY: remains on 104 handle, 107 handle longer term targeted

USD/JPY is defended on the 104 handle and has been up to challenge the 104.50 level with a high of 104.61 printed so far in the US session today.

The greenback has been supported on strong data in Markit services PMI for October that arrived 54.8 vs. 52.5 estimate and the DXY has made a recovery through the mid-point of the 98 handle again. Risk has been mixed with Wall Street offering good two way business on the indexes. Meanwhile, we will have to wait for November for anything that could really propel the major one way of the other, albeit the BoJ is unlikely to act and most focus will remain with the US elections, the Fed and the US labour market reports.

A dollar trend is developing - Nomura

USD/JPY levels

Analysts at Scotiabank explained, “USDJPY short-term technicals: neutral/bullish—USD/JPY gains stalled in the upper 104s yesterday and short-term price signals look potentially negative (daily “gravestone” doji candle). We think the USD may be consolidating, rather than reversing at this point, but the near-term risk may be tipping a little lower towards the mid 103 area where we expect support to be firmer and the USD to pick up again. Daily “cloud” chart signals remain bullish.”

Meanwhile, analysts at Commerzbank on a longer term view suspect that the market is basing and target the 107.49 July high and the 200 day ma at 107.40 at this stage. "Dips should find initial support at 103.16 ahead of the 102.15 base of the cloud."