USD/JPY hits fresh daily highs at 104.20, remains below the 20-day SMA

• USD/JPY holds onto modest gains, remains in a small range.
• Dow Jones erases losses and turns positive, US yields slide.

The USD/JPY pair rose to 104.20 during the American session reaching the highest daily level and then pulled back, holding above 104.00. As of writing, it trades at 104.15, up less than ten pips for the day.

A stronger US dollar across the board supported USD/JPY. The DXY is trading near the 91.00 zone, in positive territory. Also, the improvement in risk sentiment weakened the yen. In Wall Street, the Dow Jones is at daily highs up by 0.30% and the S&P 500 gains 0.15%.

Technical outlook

From a technical perspective, the USD/JPY continues to consolidate, still within a downtrend line, and holding below the 20-day moving average (104.30).

Following the sharp slide of last Thursday, volatility has constantly been falling. Is it consolidating around 0104.00, without a clear direction. The key short-term support is seen at 103.65/70: a break lower would expose the November low at 103.15.

On the upside, the immediate resistance could be located at 104.30 (203-day moving average) followed by 104.75 (November 24 / December 2 high). An eight-month downtrend line stands at 105.10.

Levels to watch