USD/JPY: bulls target 20 dma at 108.80

USD/JPY is currently a top performer on the back of the dollar's strength where markets are backing the greenback, while everywhere else, currencies are in decline due to softening inflation outlooks.

USD/JPY has found a strong bid since last week's nonfarm payrolls, in a continuation of the theme where the dollar and denominated assets are attractive considering the skepticism for markets elsewhere. The nonfarm payrolls were by far a booster for the dollar in essence, but it is back to the same old question as to where else have investors got to go?

The BoJ is trying to verbally intervene but is really is all about the dollar. However, the minutes of yesterday were an additional catalyst and markets are considering the state of play should the BoJ refrain from going even further negative of deposit rates.

USD/JPY levels

There is resistance at the midpoint of the 108 handle while a break there would bring in the 20 dma at 108.80 ahead of the psychological 109 handle. The stronger resistance comes at 111.73/90 ad mid April highs and to see any real conviction, the pair needs break up through there. Buying interest may be found on pull backs to 107.90/108.10 area according to Valeria Bednarik, chief analyst at FXStreet. Below there, the daily low for 2nd May is 105.54 while 106.50 could be a tough area of support.