Last week, the USD strengthened significantly against its major counterparts except for the JPY. The US currency grew amid a rise in government bond yields and favorable macroeconomic statistics. The Japanese currency was also supported by the publication of Manufacturing PMI, which exceeded the forecast and came in at 51 points.
This week, attention should be paid to Japan’s labor market data and the publication of US statistics for Initial Jobless Claims, Unemployment Rate, Factory Orders and Manufacturing PMI.
Support and resistance
The pair is trading within a symmetrical triangle that suggests equal possibility of either the breakdown of the lower border or the breakout of the upper border of the range. The demand for the USD will continue growing amid a possible interest rate increase; macroeconomic statistics show that the US economy is doing quite well; and, according to key technical indicators, short interest is decreasing. Thus, the pair is likely to break out the levels of 120.25, 120.40 and head further up to 123.00.
Support levels: 119.80, 119.40, 119.20, 119.00, 118.60, 118.00, 117.00, 116.50.
Resistance levels: 120.10, 120.25, 120.40, 120.75, 121.30, 121.80, 122.10, 122.50.
Long positions can be opened from the current level with the target at 122.7 and stop-loss at 119.00.