USDJPY breaks higher above the key 111.00 level

The US dollar has finally made a big move on the back of good jobs and home sales data. The US house speaker Pelosi is also pushing for the Senate to pass the budget reconciliation bill which would allow the bi-partisan Infrastructure deal to pass more easily.

Market Wrap

The USDJPY has broken higher in an explosive move out of its trend channel. While retail traders on the ActivTrader platform continue to look for shorts, as seen by their extreme positioning on the ActivTrader sentiment indicator.

For a couple of days now we have been monitoring the USDJPY which has been showing momentum to the upside on the daily and weekly charts and is currently correcting sideways on the monthly chart.

A move above 111.00 now signals a breakout from the March trading range and signals much higher prices as the last few months have been consolidating between 111.00 and 107.00. Ultimately looking at the breakout on the monthly chart the 2015 highs look the most likely target but we need to get through a lot of price action from 2017 – 2018.

The US dollar move from the start of today's US session open has meant that the DXY has also made a clear break of a significant swing high and is leaving the daily 200-period ema as support below. The next major resistance level is the recent swing high and should coincide with a test of the daily 200-period ema on TLT.

Both the GBPUSD and EURUSD are looking considerably weaker with the rising US dollar strength and have a rising support line approaching current price action. I’ll be looking to get short on a clear break below this trend line, on a retest with the aim of looking for a continuation lower. Waiting for this market structure break will offer a decent area to place my stops and limit my risk. It also means I can monitor whether the price action makes new lower lows and whether the stochastic confirms this or not. If the stochastic indicator is not adding confirmation, I will see if we can get a false break down and a close back across the trend line for a continuation trade higher.

Tomorrow hosts the OPEC+ meeting and oil is going into that up 11% for the month of June. Most producers are signalling they would back an increase in supply to meet growing demand and close the deficit gap. Today’s EIA data showed crude oil stockpiles in the United States decreased by 6.7 million to 452.3 million barrels in the week ending June 25.

Meanwhile, crude oil imports were down by 0.5 million barrels compared to the previous week, and refineries operated at 92.9% of their operable capacity in the same period.