USD/JPY extends gains to four weeks highs, about to test 104.00

• USD/JPY gains almost 150 pips from Wednesday’s low on sharp reversal.
• US yields rise further supporting the US dollar.

The USD/JPY resumed the upside after a pullback to 103.50 and reached at 103.95, the highest level in four weeks. It is hovering slightly below 104.00 with a bullish momentum supported by a stronger US dollar.

The dollar is among the top performers on Thursday. The DXY trades at 89.80/85, with eyes on 90.00 up 0.35% for the day. The ongoing moves in the bond market are supporting the greenback. The US 10-year yield rose to 1.085%, the highest since March. In Wall Street, main indexes are at record highs. The Dow Jones gains 1.07%, and the Nasdaq rises by 2.25%.

USD/JPY long-term downtrend likely to be tested

The USD/JPY rose on Thursday above the 20-day simple moving average (103.50) and is about to test the 104.00 area. A consolidation above could add more strength to the recovery. On Wednesday, the dollar bottomed at 102.59, the lowest since March.

If the upside continues, USD/JPY will face a critical resistance at 104.50/60, the convergence of the 20-week moving average and a seven-month downtrend line. If it breaks above, the negative bias could be invalidated.

Technical levels