USDJPY: Dollar makes highest daily close since 2007. More to come?

After an early European dip to 120.63,  US$Jpy turned sharply higher on the release of the US CPI to reach 121.57, settling the week at the highs, assisted by Janet Yellen’s speech which affirmed that a Fed tightening this year remains on track. The closing level was actually the highest daily close since July 2007.Technically, the short term charts are a little overbought but the dailies still point higher and as with much of last week, the theme of buying dips remains intact.

Technically, the points to watch remain unchanged. On the topside, a sustained break of 120.50/60 would take the dollar towards the 10 March high at 122.02 and if/when this level can be overcome, the way would open up for a run towards the 15 July 2007 high at 122.42. In the longer term, the target of 124.13 (17 June 2007 high) would appear on the horizon, which is a huge target and will not be easily overcome. If wrong, then next target will be the Dec 2002 high at 125.72.

The downside will now find buyers at 121.30 (minor) ahead of 121.00, below which further support would arrive at 120.85 and then at 120.70 (minor) and at the Thursday/Friday lows at 120.57/63. If this is broken, which looks somewhat  unlikely, then further declines would take the dollar back to 120.25/30 and possibly to 120.00 (200 HMA), a break of which would find bids in the 119.80/85 area. Below which would head back towards 119.25 and then to 119.00.

Economic data highlights will include:

M: BOJ Monthly Economic Survey

T:

W:

T: Japan Retail Trade, Construction Orders, Housing Starts

F: Japan CPI, Unemployment, Industrial Production, GDP.

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