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USD/JPY Outlook: USD/JPY Hits 2 1/2 Month High As Recovery Accelerates Through Important Barriers

The dollar accelerates further up against yen on Friday, extending steep rally into third straight day and taking out some important barriers.

The greenback was boosted by fresh safe-haven demand on persistent fears about a coordinated assault on hedge fund short positions in the United States and on concerns that President Joe Biden’s fiscal spending package will not be as large as proposed $1.9 trillion.

Short covering and month-end position adjustments also lifted dollar. Fresh bulls broke through pivotal 104.30/50 zone (daily cloud top/100DMA/Fibo 61.8% of 105.67/102.59 bear-leg) and accelerated after triggering stops parked above.

Close above thick daily cloud would generate strong bullish signal for further advance towards targets at 105.36 (Fibo 38.2% of 109.84/102.59) and 105.65 (falling 200DMA/Nov 11 high). Bullish daily studies support the action, with additional positive signals from expectations for bullish weekly and monthly close (January’s close will be the first bullish monthly close after four straight months in red).

Broken daily cloud top reverted to strong support which is expected to hold dips and keep bulls in play.

Res: 105.00,105.36,105.65,106.10
Sup: 104.50,104.30,104.08,103.88

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