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USD/JPY picking-up pace to break beyond 120.35 – key levels

FXStreet (Mumbai) - The USD/JPY pair spiked above 120 barrier and extended gains beyond in mid-Asia, only to find fresh offers near 20-DMA and eases-off fresh session highs.

Risk-on sentiment supports

Currently, the USD/JPY pair trades 0.26% higher at 120.19, unable to surpass key resistance zone around 120.30-35. A fresh bout of selling interest gripped the Japanese currency after the Japanese manufacturing index missed estimates while the risk-on rally in equities dampened the demand for the safe-havens.
The Tankan quarterly business survey showed that the large manufacturers’ index fell from 15 to 12 in the September quarter, opposed to expectations of 13.

Japan’s Nikkei is rallying over 2% and Australia’s ASX is advancing 1.64% which further adds to the upbeat sentiment towards the greenback, which remains broadly stronger on the back of the recent impressive US ADP data.

Moreover, comments from ex-BOJ deputy Governor Iwata, noting that further scope for easing is likely, also weigh on the yen, driving USD/JPY higher.

Looking ahead, the major will be influenced by the USD moves as focus now shifts towards the much-awaited US payrolls data due tomorrow. While the US ISM manufacturing PMI report and weekly jobless claims due later today will be closely eyed.

USD/JPY Technical levels to consider

To the upside, the next resistance is located 120.64 (Sept 22 High) levels and above which it could extend 121.02 (Sept 17 High). To the downside immediate support might be located at 119.22 (Sept 29 Low) below that at 118.83 (Sept 8 Low) levels.

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