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USD/JPY trims losses, eyes on 107.00

FXStreet (Edinburgh) - The greenback is gathering traction on Tuesday, now lifting USD/JPY back beyond 106.80 and closer to the psychological barrier at 107.00.

USD/JPY back to square one

Spot has almost fully recovered the intraday pullback to the boundaries of 106.20, bolstered by a renewed demand for the US dollar after market rumours hinted at the likeliness of sovereign bond purchases by the European Central Bank. While these rumours seem to be driving the market sentiment at the moment, traders will look to US Existing Home Sales for further news from the housing sector. Morten Helt, Senior Analyst at Danske Bank, suggested, “we still expect that relative monetary policy will be a driving factor in pushing USD/JPY higher in the longer run. We target USD/JPY at 108 in 1M, 110 in 3M, 112 in 6M and 114 in 12M”.

USD/JPY levels to watch

At the moment the pair is losing 0.08% at 106.85 with the next support at 106.14 (low Oct.17) followed by 105.51 (low Oct.16) and then 105.39 (daily cloud top). On the flip side, a breakout of 107.00 (high Oct.21) would aim for 107.39 (high Oct.20) and then 107.49 (high Oct.15).

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