USD/JPY approaches 110.70

After finding firm support at 109 USD/JPY was able to extend the gains to the weekly R1. The next milestone is the weekly R2 level at 110.34—the last hurdle before we see a test of the 2008 high at 110.72. In case of a strong sell-off from here, the pair may return to 108, where it will be expected to stabilise and resume the rally, since this area is created by the monthly PP, weekly S2 and a rising trend-line.

Just as yesterday, the sentiment with respect to USD/JPY remains distinctly bearish—as many as 70% of open positions are short. But the share of orders to purchase the U.S. Dollar at the same time increased from 64 to 69%.