Global tensions are setting up the USD/JPY Bulls for further upside action. Trade war rumblings have been pushed back now that the U.S. military is flexing its muscle. In the short run the fundamental impact favors USD Bulls. First came the missiles, and next will be further global economic sanctions. These factors are sure to send rumblings throughout the currency markets. The long term impact is hard to gauge, but the short term USD/JPY rally may get a boost from the military actions in Syria. The U.S. was calling to withdraw from Syria, and now it is involved in heightened military strikes. This may continue to play a role in market direction for weeks to come.
Technical factors are also Bullish for the USD/JPY. The market has sustained a trade above the Reverse Head & Shoulders Neckline which reinforces the recent uptrend. This Rally started back in March with a Bullish Engulfing Pattern that put the brakes on the long term Bear trend. Notice that this was the Head for the Head & Shoulders Pattern. Currently this currency is in wave three for the trend higher, and there is a Key Resistance Band to target. Unless there is a strong Bearish reversal of momentum, the market is potentially targeting the 108.153 level. A 108.462 price level could likely cap upside follow through, and that is about all that is expected for the recent Bullish run. Resistance is likely to put a halt to the Bulls intentions in this area because it is a strong Monthly Pivot Point area. Although there is a pause expected here it is likely to be a digestive phase. The long term upside objective is the 109.633 level.
A test of the 106.976 level is not out of the question if the Bulls start to take a rest. The long term Bear trend has been reversed over the last month and a half. It would be a good time and area for the market to consolidate before the next leg higher. Only sustained trading under 106.976 reverses the very positive outlook for the USD/JPY as the Bears sharpen their claws. Critical Support at 105.653 is the downside sell off target for any fresh selling pressure. There is not expected to be any trading below here. Any dip under 105.653 is a negative indication that the long term Bear trend is back with force.