A further drop in unemployment claims helped keep the greenback steady and maintain its gains against the yen. USD/JPY has rallied above ¥109.00 and is now firmly in unchartered territory heading into the end of the week.
Highs from August 2008 were above ¥110 (¥110.67) and that’ll be the next target. A break of this level would see the pair trade at December 2007 levels. The Nikkei has rallied and is headed to January highs at 16320.
This trend in USD/JPY and the Nikkei is likely to continue as investors buy the dips. A concern is the fact the RSI suggests USD/JPY is overbought at the moment. I would suggest traders already long should continue to trail stops in order to maximise potential from the position.