USD/JPY extends recovery breaking above 108.50

• US dollar rises further across the board after US data. 
• USD/JPY up for the second day, recovers important technical levels. 

The USD/JPY broke above 108.50 during the American session and climbed to 108.61, matching Friday’s top. As of writing, it trades above 108.50, holding a modest bullish tone, gaining for the second day in a row. 

A stronger US dollar across the board boosted the pair. The greenback and the yen are among the best performers on Tuesday but the recent move higher in USD/JPY put the USD at the top. Economic data from the US came in better-than-expected, helping the upside. 

The ISM Non-Manufacturing PMI in December rose to 55, above the 54.5 expected while Factory Orders in November registered a 0.7% decline, smaller than market consensus. 

Before the report, the greenback was already trading higher. The DXY is testing weekly highs above 97.00 and it has fully recovered from Monday’s losses. 

Technical outlook 

If the USD/JPY manages to hold on top of 108.50, the short-term outlook would improve for the US dollar, alleviating any bearish pressure. On the upside, the next resistance might be seen at 108.70 followed by 108.85. 

A slide back below 108.50, would put the pair back in the previous range between 108.50 and 108.25. If it breaks and holds firm under 108.15, a test of the weekly low at 107.75/80 seems likely.