The US dollar rallied against its Japanese counterpart on Friday, taking the price to more than 111.60 following the Bank of Japan (BoJ) monetary policy announcement. The bullish momentum had already triggered yesterday after the better than expected US GDP figure for the third quarter. The upside rally is massively strengthened on Friday, with the price hitting the highest level since September 2007.
As of this writing, the pair is being traded around 111.62. After hitting the multi-year high at 111.52, the price fails to find any resistance and is further rallying to print new highs.
On the downside, the pair may find a moderate support around 107.61, as demonstrated by the trend line in the above chart. The overall bias is bullish because of higher low on the daily chart. The bias will remain bullish as far as the 107.61 support area is intact.
BOJ Interest Rate Decision
The Bank of Japan decides to hold the rate at 0.1% in line with expectations. The bank however announced an unexpected increase in the quantitative easing program that caused JPY to plunge against almost every currency.
Reuters/Michigan Consumer Sentiment Index
The US Consumer Sentiment Index remains at 86.4 as compared to 84.6 for the month before, the average forecast of different analysts says. Generally speaking, a high reading gives an indication of increased consumer confidence and is seen as bullish for the US Dollar. Thus a better than expected figure will further support the ongoing upside rally in USD/JPY and vice versa.
Considering the overall technical and fundamental outlook, selling the pair could be a good option in the short term if the price leaves a bearish pin bar or bearish engulfing pattern on the daily chart.