USD/JPY's rally remains on course for key tests, with the help of rising oil and an unexpectedly strong Philly Fed report nZON02AU00, but a temporary pullback is possible if the first attempt fails. First up is resistance at 110.85, November's low and 61.8 percent of the 114.73-104.56 November-March tumble.
If it holds the initial test, or the 161.8 percent Fibo target off the March 26-28 base by 111 does, then there's room for a dip toward bids below the 200-DMA at 110.17 and above 110. However, the broader objective remains 112 and the down trend since 2015.
Rising oil prices on growing evidence that European companies are leaving Iranian agreements following the U.S. exit from the nuclear deal is supporting USD/JPY. It helps the massive U.S. energy sector, spurs inflation and, therefore, bolsters Fed tightening prospects and Treasury yields. Meanwhile, it puts pressure on Japan as an energy-importing nation.
These supports for USD/JPY, have so far allowed the market to shrug off Japan's talk of potentially placing counterbalancing trade tariffs on U.S imports and dimming North Korea summit prospects.