The US dollar holds firm tone against yen at the beginning of the week and breaks above important barriers at 111.12/21 (100SMA / weekly cloud top), in extension of last week’s strong rally (the pair was up 2.5% for the week.
Dollar’s positive sentiment was boosted by rise in US Treasury yields and growing expectations that the Fed may rise interest rates once more this year, most likely in December.
Japanese yen was further pressured on Monday by reports that Japanese Prime Minister Abe may call for an early election in October.
This week’s focus turns on FOMC policy meeting on Wednesday, with US policy makers expected to signal the start of the normalization of massive balance sheet, which would help the economy to get back to normal mode, as well as boost long-term interest rates.
Technical studies remain firmly bullish and support further advance which eyes next strong resistances at 111.61 (daily cloud top) and 111.75 (Fibo 61.8% of 114.49/107.31 descend).
Broken 100 SMA (111.12) and session low at 111.00 (reinforced by 55SMA) mark initial supports, with daily cloud base (110.75) expected to contain extended dips.
Res: 111.61, 111.75, 112.19, 112.80
Sup: 111.21, 111.12, 111.00, 110.75
