USD/JPY bulls close to 107 handle on rising US Dollar

• The USD/JPY is having one of its best daily gains in weeks.
• Better than expected US GDP, US-China trade wars receding, and quarter-end profit taking are supporting the greenback. 

The USD/JPY is trading at around 106.84, up an above-average 1.40% on Wednesday as improved risk on sentiment is coupled with the stabilization of  US and European indices.  

The Nasdaq which saw a big sell-off has found some support at its 200-period simple moving average, while the S&P 500 Index is virtually unchanged but still trading close to 4-day lows. On the other hand, the Dow Jones Industrial Average Index is trading little changed but slightly in the red still below the 24,000 mark. 

The risk of a trade war between the US and China lifted the safe-haven appeal of the Yen in the last weeks. However, the threat of protectionism is receding as both parts are ready to negotiate and the Yen is weakening as it loses its safe-heaven characteristic. 

Earlier in the New York session, the US Gross Domestic Product (GDP) for the last quarter of 2017 came in better-than-expected and the market went dollar bid across the board. The US Dollar index is now flirting with the $90 mark as bulls have been buying the greenback since the open of the day with very little pullbacks in the way. 

What is also helping to drive the USD/JPY pair higher is the positive sentiment toward the US Dollar. Quarter-end along with month-end profit-taking coupled with US bond yields bouncing from early lows, all of them boosting the greenback, according to Valeria Bednarik, Chief analyst at FxStreet.

USD/JPY daily chart

The USD/JPY is having so far on Wednesday one of its best days in weeks if the bulls keep the momentum going. The 106 handle has been cleared and the next resistance is sight is already the 107 psychological level; if the bulls break through it there seems to be little in the way to the 107.90-108.00 swing high. 

USD/JPY 4-hour chart

As the bulls are progressing higher, resistance and scaling points are seen at 107.30 swing high; followed by 107.70 swing high and finally, the 107.90-108.00 swing high. On the flip side, support is seen at 106.50 swing high and 200-period simple moving average and at the 106 level, followed by the 105 handle.