- USD/JPY takes out post-FOMC minutes highs to challenge 50-DMA at 110.19.
- Fed minutes signalled tapering is coming before the end of this year.
- RSI has pierced through the midline, the tide has turned in favor of bulls.
USD/JPY is challenging four-day highs above 110.00, having taking out the post-FOMC top at 110.07, as the bulls continue to take advantage of the unabated US dollar demand across the board.
The Fed minutes revealed that the officials discussed tapering plans for the latter part of this year when they met in July for the monetary policy review. The greenback bulls were just awaiting this confirmation for advancing further, which drove USD/JPY higher alongside.
However, the bulls could face some stiff resistance on its three-day uptrend, as the Treasury yields are bearing the brunt of the risk-off trading in the global markets, thanks to the covid woes and tapering fears.
Technically, USD/JPY needs to crack the 50-Daily Moving Average (DMA) at 110.19 on a sustained basis to unleashing the recovery towards the August 13 highs of 110.46.
Further up, the buyers will target the August 11 highs of 110.80.
The daily Relative Strength Index (RSI) has pierced through the midline, reclaiming the bullish territory, which suggests that the tide has turned in favor of the optimists.
USD/JPY daily chart
On the flip side, horizontal 21-DMA offers immediate support at 109.89, below which the daily low at 109.77 will get tested.
The last resort for USD/JPY buyers is envisioned at the 100-DMA cap at 109.66.