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USD/JPY remains above 117.50; enjoy the USD bull and JPY bear cocktail

FXStreet (San Francisco) - The USD/JPY is trading in a phase of consolidation after the latest bullish movement that brought the pair from 117.20 to 7-year highs at 117.70. After the US data, the pair remains above 117.50.

The US building permits rose 4.8% to an annual rate of 1.08M in October; Housing starts decline 2.8% to 1.0M but previous month was largely revised to +7.8%.

Currently, USD/JPY is trading at 117.53, up 0.52% on the day, having posted a daily high at 117.70 and low at 116.80. USD/JPY spot is in extremely overbought territory according to the hourly FXStreet OB/OS Index, while the FXStreet Trend Index is slightly bullish.

USD/JPY sentiment

The USD/JPY has been fueled by Abe’s announcements yesterday and today’s Bank of Japan decision to leave monetary policy unchanged.

According to Credit Suisse, there are a mix in between USD bullish: "We believe the Fed will be tightening sooner and more than the market is expecting. This underscores our bullish USD outlook, especially against currencies where we expect the central bank to ease further." And a JPY bearish: "he combination of an election, additional BoJ easing and anticipated GPIF flows should keep the yen under pressure. We believe owning USDJPY vol is a good expression of this view."

As for the short term, with a successful extension above 117.70, the pair will find next resistances at October 2007 high at 117.95 and 118.00. To the downside, supports are at 117.50, 117.25 and 117.00.

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