- USD/JPY jumps back on the bids in tandem with the US Treasury yields.
- 21-DMA is the level to beat for the bears, as risk-off mood lifts the USD.
- RSI inches higher above the midline, more upside remains likely?
USD/JPY is trading above 114.00, looking to extend Friday’s sell-off to weekly lows of 113.58, as the US Treasury yields rebound across the curve ahead of this week’s Fed minutes.
Expectations that the Fed could offer any hints on the timing of a rate hike fuel a renewed upside in the yields, in turn, benefiting the US dollar. The greenback also takes advantage of the prevalent risk-off market profile, courtesy of the concerns about European COVID-19 curbs.
USD/JPY’s daily chart shows that the price has managed to recapture the critical horizontal 21-Daily Moving Average (DMA) at 113.89.
On Friday, the major briefly dipped below the latter but managed to give a daily closing above it, keeping the buyers hopeful.
Meanwhile, the Relative Strength Index (RSI) is inching higher above the midline, suggesting that the recent uptick could likely extend in the session ahead.
USD/JPY: Daily chart
A daily closing below the 21-DMA could trigger a fresh downswing towards Friday’s low, below which a run south towards the 113.00 cannot be ruled out.
Further down, an upward-sloping 50-DMA at 112.66 will then challenge the bullish commitments.