USD/JPY Soars as Dollar Benefits from Flight to Safety

The USD/JPY spiked higher overnight as the dollar has benefitted from safe haven flows following the downgrade of Portugal’s credit rating by Fitch. The news added to the troubles in Greece which have seen Germany and France throw their support behind the troubled nation seeking aide from the IMF. Last week I stated that I would refrain from going long the pair unless I saw a break above 92.00 which is where the current rally has stalled. A break above the 200-Day SMA at 91.56 and the declining trend line are strong bullish signals. A break above the psychological level would be a sign that the current rally is sustainable. Our initial target would be 93.78-1/8 high followed by 94.79-38.2% Fibo of 110.70-84.84. However, I would also look for a potential reversal if we see momentum fade.