In the wake of much better-than expected U.S. retail sales data nLLAIFEFLO, potential for a USD/JPY breakout above 112 is building.
But ahead of a long holiday weekend, with Treasury yields not rebounding much and large 112 option expiries today, USD/JPY longs may have to wait until next week to see the topside of the recent consolidation overwhelmed.
To get that breakout, the pair needs a daily close above 112.08, 76.4 percent of the 114.55-104.10 slide, and to clear November and December swing lows in the 112.23-30 range.
These are the key ingredients for a run up to the 114.00s, where rallies have been failing over the last two years.
In any event, the 1.6% U.S. sales surge and 1% control group jump, along with another sub-200k jobless claims reading, is lifting the dollar broadly.
The sales data will send Q1 GDP estimates upward again and make the markets less concerned about the U.S. economy's ability to recover from a weak winter performance amid a global slowdown.
Better-than-expected Chinese data have helped the global growth and risk outlook a bit, even if soft EU PMI data nL5N2201Y9 and North Korea missile testing nL3N21Z4K2 are diminishing that impulse.