USD/JPY: making further tracks towards 55-day ma at 112.00 key target

Currently, USD/JPY is trading at 111.08, up 1.20% on the day, having posted a daily high at 111.20 and low at 109.60.

USD/JPY is extending the upside with a continuation of the risk-on momentum in markets in the US session today. 110.34 and then 110.58 gave way to the demand while US stocks took off. S&P 500 is up to make fresh highs for the month and highest levels since March 15th and same goes for the Dow. However, while the markets are enjoying a run of optimism after the French election's first round result, there are many risks ahead that could check the bulls at a drop of a hat, from geopolitical tensions and fundamental political and economic variables this week. 

Trump's tax plans to be made public Wednesday - UOB

The first round of risk comes from Trump's announcements that are scheduled for tomorrow around his tax reform policies. Also, his first 100 days coming to an end could drive a fresh round of protectionist policies coming to fruition as a risk to globalisation and world trade and again could firm up the safe haven block where the yen would benefit from.

USD/JPY levels

"We should see a rally towards the 111.35/59 area, made up of the November 28 low, February low and the current April high," explained analysts at Commerzbank. "The next higher 55-day ma at 112.00 also remains in focus. Only above 115.62 would we look for a challenge to the key resistance offered by the 16-month resistance line at 117.14. Where are we wrong? Below 108.13 will target 107.50 July 2016 high and possibly 106.85, the 61.8% retracement. We cannot rule this out but it is not our favoured scenario."