USD/JPY finds acceptance above 1H 100MA, focus on stocks

• USD/JPY is holding above 100-hour moving average. 
• Further gains likely if the European and US equities are solidly bid. 

The 300-point rally in the Dow index put a bid under the USD/JPY pair, pushing it above the 100-hour moving average (MA) resistance. As of writing, the spot is trading at 106.35, having a clocked a session high of 106.46 earlier today. The 100-hour MA is still sloping downwards and was last seen trading at 106.27. 

BOJ governor Kuroda reiterated his easing bias during the speech in the upper house of parliament and hence had little impact on the USD/JPY pair. 

Trump's tariff plan, the resulting fears of trade wars and the risk aversion in stocks had pushed the USD/JPY pair down to 105.25 on Friday, the lowest level since November. 2016. The recovery to 106.46 has established a bullish price-relative strength index (RSI) divergence on the daily chart, meaning the spot could rise further towards the resistance of the descending trendline (sloping downwards from the Jan. 8 high and Feb. 2 high). 

That said, the pair will likely extend gains only if the US stocks extend yesterday's rally. At press time, the S&P 500 futures are flat lined. Thus, the USD/JPY spot is moving in a sideways manner above the 100-hour MA.

USD/JPY Technical Levels

A break above 106.68 (10-day MA) would expose descending trendline resistance seen at 107.13. A daily close above the same would add credence to the bullish RSI divergence and could yield a stronger rally to 107.91 (Feb. 21 high). On the downside, breach of support at 106.16 (session low) could yield a re-test of 105.55 (Feb. 16 low) and 105.25 (Mar. 2 low).