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USD/JPY: bulls breaking up on positive Yellen and risk

FXStreet (Guatemala) - USD/JPY has remained firm as global equities continue to advance and moves through October highs of 121.47 with bulls eager for a break-out to test the 100 DMA at 121.76 and the golden ratio 61.8% level of the August highs of 125.27.

The data out of Japan was also impressive with Japanese services PMI that grew to 52.2 in October from 51.4 in September and composite PMI grew to 52.3 in October from 51.2 in September. Then, Japanese Consumer Confidence Index grew to 41.5 in October (Consensus 40.8) from 40.6 in September.

From the US shift so far, the data has also been good with Markit PMI Composite for Oct 55.0 vs 54.4 previous, Markit Services PMI for the same month beating expectation of 54.6 arriving at 54.8 and up on pre 54.4 while ISM Mon-Manufacturing PMI coming in at 59.1 vs 56.5 consensus and 56.9 pre. The ADP report, 182k vs 180k, but below 190k pre, still sets a positive back-drop for Nonfarm Payrolls on Friday.

See here for FXStreet's Nonfarm Payrolls forecast

Yellen has finally hit the wires and treasuries are feeling the pressure on hawkish comments, saying that Dec is live if data is supportive while saying that the FOMC thinks that it might be appropriate to move in the same month while saying the economy is performing well. We await to hear from Dudley and Fisher.

USD/JPY levels

Technically, there is a bullish case building once again although we remain in the familiar ranges. The break out points stay with 121.80 (above the 100 DMA) while the 200 DMA at 121.07 has been fully breached looking for with daily closes towards 122.00 as confirmation of a bullish wave with the next big resistance to break. To the downside, the 200 DMA, 120.00, 119.20 and 118.00 and 116.00 remain as key targets.

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