The USD/JPY’s up trend resumed last week after price broke 122.01 resistance and reached as high as 124.45. The pair lost some momentum after breaching 124.13 (June 2007) key resistance. Initial bias is neutral this week for some consolidations first. Downside of pull back should be contained by 38.2% retracement of 118.88 to 124.45 at 122.32 and bring rally resumption. As noted before, sustained trading above 124.13 key resistance will pave the way to 61.8% projection of 105.19 to 121.84 from 118.88 at 129.16 next.
The U.S dollar fundamentally remains the strongest amidst other currencies. The dollar strengthened broadly in May as stronger U.S. economic data prompted investors to bring forward expectations on the timing of an initial rate hike by the Federal Reserve.
Upbeat reports on inflation, new home sales, business investment and consumer confidence during the month all indicated that the economy is gaining momentum after a weak first quarter.
In the week ahead, Friday’s U.S. employment report will be closely watched for signs of improvement in the labor market.