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USD/JPY enters into the pocket of space, potentially freeing up more gains

The dollar continues to push higher in the post-election period and in the case of USD/JPY, that momentum is helped by higher yields as well. The pair has been on a tear since October trading, racing up from 143.00 all the way to touching 156.00 earlier today. The break above 155.00 yesterday is a crucial one, signifying another breach of a key technical/psychological level.

When it comes to USD/JPY, there’s always something about big figure levels. And this is arguably no exception.

With buyers clearing the key daily moving averages and 150.00 mark last month, the focus has been drawn on the 155.00 mark since. And inevitably with Trump winning the election, we’ve finally gotten there today.

And having done so, we’re into a bit of a pocket of space with little to no technical resistance all the way to 160.00 potentially.

It doesn’t mean we’ll get there overnight but it does present an attractive level for buyers to take aim at. Nonetheless, the pace of any further gains will of course be another thing to be mindful of though.

That might invite scrutiny from Japan officials to verbally intervene. As for any real intervention threat, it’s going to be tough to fight the underlying market momentum in play currently. So, I wouldn’t imagine Tokyo trying that out – at least for the time being.

The bond market is once again going to be a key driver to be mindful of when it comes to USD/JPY. But for now, the overall dollar bullishness is also helping to underpin the pair rather strongly. That especially when the greenback is starting to creep up on some key technical levels in the bigger picture, as seen here with EUR/USD.

This article was written by Justin Low at www.forexlive.com.

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