Overbought conditions might hold back USD/JPY, but in the longer-term the rally here is still intact.
USD/JPY could reach ¥105
With the ¥104 level breached there seems room for further upside in this currency pair, although it is still sharply overbought according to the daily relative strength index.
Attempts today to push the dollar down versus the yen have come to nought, as the meeting between the Russian and Ukrainian presidents went by relatively uneventfully. Meanwhile, a strong reading on US consumer confidence, which saw the index touch levels not seen since October 2007, gave extra impetus to the dollar.
Looking into the rest of the week, US data remains sparse tomorrow, but jobless claims and a first revision to the GDP reading will provide some important points to look out for. Further gains to the upside would bring us within striking distance of ¥105, with the peak for the year around ¥105.40 just beyond that. The ¥103.70 level on the downside should provide support.