USD/JPY: bulls eyes on key 104.32 - market developments shifting?

USD/JPY is in the hands of the bull's again and could remain so for some time given the latest turn of events.

This past week or two has been very eventful. Maybe not so much in outright price action, (bar Sterling of course), but more in respect of what has been going on in the background, should one be looking for a medium term outlook?

We have had the second presidential debate after Trump's alpha-male boasting and the media who have totally spun it in favour of Clinton's campaign by arguing that she has now won two of the three debates and is standing the best chance to win the election schedule for November 8th - This is dollar supportive in the near term. We also have risk back to the table and higher global yields, neither of which should be supportive of the Yen, especially while the BoJ is doing all it can to massage the value of the Yen lower on the back of their easing bias making for a divergence and even larger yield spread.

However, risk mood is changing week by week, if not day by day, and in such fragile market conditions, it may not take much to put the ball back into the bear's court while the price remains below 104.31 Sep highs. The woes of some of Europe's banking sector should still remain at the forefront of the markets, especially considering thatDeutsche Bank AG hasnot been able to find an accord with the U.S. Justice Department, so far, over the concerns about the bank's ability to pay a $14 billion opening settlement bid from the Justice Department - such concerns had already sent the company's stock to a record low last month and supported safe haven flows.

USD/JPY levels

The September high at 104.32 is key and analysts at Commerzbank suggest that a rise above which will target the May low at 105.55. "Slips should find support between the 102.79 September 21 high and the 55 day moving average at 101.92."

In the near term, on the 4hr sticks, Valeria Bednarik, chief analyst at FXStreet explained, "In the 4 hours chart, the Momentum indicator is unable to enter positive territory, but the RSI indicator heads north around 62 whilst the price is well above its 100 and 200 SMAs, favoring another leg higher towards 104.15, last week's high, and beyond."