The USD/JPY breaks above the 105.00 level

The bullish momentum increases on the USD/JPY after the ISM Manufacturing PMI out of the U.S. came out at 59.0, when the market was expecting 57.0. This is clearly a better than expected reading and that is why the Dollar gains strength. The United States economy continues showing signs of a sustainable economic recovery, which actually supports the idea that the FED may be getting ready to raise its interest rates. This implies more strength for the greenback in the near future.

Technically and fundamentally, this pair still has a lot of potential to keep heading higher. However, in the short run we may see a correction to the 104.35 zone. At the moment the 105.00 level could become support and a pullback to that level could present investors with an opportunity to add to their long positions.

Another possible scenario is that the pair does not go anywhere and it stays consolidated around the current levels, just to catch some air before continuing higher. In that case, all what we can do is patiently wait and see if the prices continues to the 106.00 level.