USD/JPY Violates Double Top Resistance - Brace for Buying Trend! 

The USD/JPY is trading sharply bullish at 106.766 level, and recently it has crossed over double top resistance level of 106.290. One of the major reasons behind such a dramatic buying in USD/JPY is stronger U.S. dollar and weaker Japanese yen. The Bank Lending for the year from Japan came in as 6.3% against the expected 6.2% and provided strength to Japanese Yen. The Current Account from Japan showed a balance of 1.05T against the expected 1.00T and supported the Japanese Yen. At 10:05 GMT, the Economy Watchers Sentiment from Japan in July improved to 41.1 from the expected 40.0.

The traders mostly ignored the data from Japan as at the same time. The traders were cheering the vaccine news. On the U.S. front, the NFIB Small Business Index dropped to 98.8 from the projected 100.7 and weighed on the U.S. dollar. At 17:30 GMT, the Core PPI for July rose to 0.5% from the expected 0.1% and supported the U.S. dollar. The PPI for July also rose to 0.6% from 0.3% and supported the U.S. dollar.

The better than expected PPI data from the U.S. gave a push to the already rising USD/JPY pair on Tuesday. Meanwhile, on the US-China front, China showed its intentions to impose sanctions on 11 Americans in retaliation to Friday's U.S. sanctions on Hong Kong & Chinese officials. The list of Americans issued by China included Senator Macro Rubio and Ted Cruz also that would be sanctioned.

Furthermore, U.S. President Donald Trump announced that he was considering a capital gains tax cut to help job creation. Another executive order on capital taxation from Trump would likely face legal challenges because it would push the President's executive orders' boundaries.

However, Investors also cheered Trump's intensions for capital taxation in the absence of the U.S. Stimulus package and supported the U.S. dollar that kept the USD/JPY pair's gains ongoing.

Daily technical Levels

Support resistance

106.04 106.82

105.59 107.15

105.26 107.60

Pivot point: 106.37

Technically, the USD/JPY is trading with a bullish bias at 106.795, with immediate support at 106.300, which extended resistance yesterday. On the 4 hour chart, the USD/JPY has already violated the downward trendline at 106.800 level. Closing of candles above this level is suggesting odds of further buying until 107.327 level. Good luck!

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