FxWirePro: USD/JPY pierces into daily cloud, Fed minutes boost U.S. dollar

USD/JPY chart - Trading View 

Spot Analysis:

USD/JPY extends previous session's gains, trades 0.36% higher at 110.16 at around 04:40 GMT

Previous Week's High/ Low: 110.80/ 109.54

Previous Session's High/ Low: 110.06/ 109.47

Fundamental Overview:

The dollar remains buoyed across the board, lifting the dollar index (DXY) to a nine-month high at 93.50.

FOMC minutes overnight showed that the policy makers were mostly in agreement that a stimulus taper would start this year.

Minutes from July meeting showed U.S. central bank policymakers saw the potential to ease bond-buying programme this year if the economy continues to improve as expected.

That said, the minutes also magnified the importance of the next few months' jobs reports, and emphasised that solid gains are needed to meet the Fed's expectations.

On the other side, yen under pressure as Japan struggles to shake off concerns that the spreading Delta coronavirus variant could delay an economic recovery.

COVID-19 cases in Japan continue to rise rapidly even after the government expanded emergency measures to fight the infectious Delta variant.

Focus will be on the PBOC's actions after the annual Jackson Hole policy symposium. Markets expect the Fed to reveal the timing of tapering at the annual conference of central bankers next week.

Technical Analysis:

- USD/JPY extending gains for the 3rd straight session

- Price action has pierced into daily cloud and edged above 200H MA

- RSI is bias higher and has edged above 50 mark

- GMMA indicator is neutral on the daily charts, but shows a bullish shift on the intraday charts

Major Support and Resistance Levels:

Support - 109.51 (23.6% Fib), Resistance - 110.51 (Cloud top)

Summary: USD/JPY pivotal at daily cloud. Breakout above will buoy bulls. Retrace below 200H MA will negate any further upside.