The Yen has extended its depreciation against the US Dollar reaching yearly highs this week after optimism around vaccine efficacy buoyed the greenback. In addition, rising inflation and optimism around the U.S. stimulus package has sustained the rise in U.S. treasury yields which has in turn boosted the Dollar.
This week USD/JPY pushed above prior resistance and February swing high at 105.68 – now turned support. The RSI is in overbought territory and indicates a divergence between spot prices and the momentum indicator. This means that bullish momentum may be slowing and could suggest a price reversal against the short-term uptrend which referred to as bearish divergence
Should bearish divergence unfold, the 105.00 psychological will serve as initial support with the 104.40 area of confluence swing low to follow.The bullish perspective could see this weeks swing high at 106.20 being targeted once again with the 106.50 to ensue. Bulls may look for price rejection below current support at 105.68 before looking to enter.
