USD/JPY: can the bulls break the stiff cloud resistance at 111.60/70?

Currently, USD/JPY is trading at 111.49, up 0.60% on the day, having posted a daily high at 111.61 and low at 110.99.

USD/JPY New York bulls have taken on the bullish baton from their Asian compadres and taken the yen down to fresh eight-week lows due to investor appetite and quiet geopolitical news from over the weekend in respect to N.Korea. 

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At the same time, there is focus on the FOMC this week, and that means the bulls can rely on the potential of Fed rate hikes vs the BoJ's dovish bias, despite two new board members attending their first BoJ interest rate decision meeting, Goushi Kataoka, 44, an economist and a well-known reflationist and the 63-year-old former banker Hitoshi Suzuki, who previously said it’s “somewhat risky” to start discussing an exit when price growth is far from the goal. 

The pair joined the board on July 24, less than a week after the BOJ pushed back its forecast for reaching 2 percent, reinforcing the view that the central bank may be years behind the Fed in winding back its stimulus program, making for a bullish bias for the week ahead in USD/JPY. Investors are also noting that Japan's PM Abe has fueled early election talk by telling the media he’ll decide on whether to call a snap vote after his visit this week to the US. 

USD/JPY levels

Analysts at Scotiabank explained that they are neutral/bearish on a technical basis. "A “shooting star” signal on the 6-hour chart suggests a peak may be in for now. We see support at 110.60/70 near-term," the analysts explained. However, the bulls have managed to push through some of the stiff resistance on the daily and weekly cloud chart in the low 11s area today and which extends to 111.61.  A break of this resistance here guards the 112.27 200 day ma and the top of the range at 114.38/49.