USD/JPY: Bulls conquer 113 handle, what next?

The USD/JPY pair reversed a brief corrective dip seen earlier on the day, now flirting with fresh seven-month tops reached at 113.00, as the bulls ignore broad based US dollar sell-off.

The latest leg up in the spot can be mainly attributed to the risk-on rally in the European equities and renewed upside in the treasury yields across the curve. The US yields continue to cheer an upbeat assessment of the economy by the Fed, which pointed towards an imminent June Fed rate hike.

Meanwhile, the European stocks hovered near 21-month highs on the back of a slew of upbeat corporate earnings results, especially from heavyweights such as Royal Dutch Shell PLC and HSBC Holdings PLC.

The major now awaits the US weekly jobless claims, factory orders and trade balance data for fresh momentum, while tomorrow’s key US NFP data will determine next direction in the spot.

USD/JPY Technical levels                 

A break above 113.36 (classic R2/ Fib R3) would expose 113.50 (Mar 17 high) and 114 (round figure). On the other hand, a breach of support at 112.50/49 (100-DMA/ daily pivot) could yield a test of 112.17 (5-DMA) and 111.56 (10-DMA).