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USD/JPY in tactical retreat after failure at 106.88

FXStreet (Moscow) - USD/JPY bumped at 106.88 and retraced towards its current level of 106.75 as the bulls need to pluck up after an initial failure at the above said resistance.

JPY in the free fall

USD/JPY bulls seem unstoppable. The pair climbed to new six year highs on Wednesday. It is strongly overbought, but there are few signs of momentum stalling. The key factor behind the move is USD strength on the back of improved economic fundamentals. Investors are waiting for more hawkish comments from Jannet Yellen and her colleagues during the next FOMC on September 18, which pushes Treasury yields higher and supports USD across the board. Moreover, BOJ Govenor Haruhiko Kuroda virtually gave a green light to JPY weakening as he insisted that "fall in the yen from its current value would not have a negative effect on the Japanese economy». Among the headwinds that may derail USD/JPY rally are geopolitical factors. Russia cut Poland from gas supply, which may escalate the tensions and lead to new mutually harmful sanctions. While neither USD, nor JPY are directly affected, general risk-aversive sentiments mights support JPY. On the intraday basis keep an eye at 106.88 on the upside and 106.55 on the downside.

What are today’s key USD/JPY levels?

Today's central pivot point can be found at 106.60, with support below at 106.30, 105.73 and 105.43 with resistance above at 107.17, 107.46, and 108.03. Hourly Moving Averages are bullish, with the 200SMA bullish at 105.31 and the daily 20EMA bullish at 104.53. Hourly RSI is bullish at 57.

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