USDJPY was hovering around three-month highs on Wednesday afternoon in the London session, after shedding about 1% of its Tuesday highs to trade at 150.633 at 13.45 pm GMT. The Japanese yen cracked under pressure from the US dollar on Tuesday as the greenback capitalized on a higher-than-expected January US inflation rate.
Japan’s Finance Minister Shunichi Suzuki warned on Tuesday against speculative trading on the yen amid speculation that the government would intervene if the yen went below the 150.00 mark. That mark has since been crossed, and investors will likely hold off on any rapid selling of the yen.
Meanwhile, Japan’s cabinet office will release last quarter’s GDP figures later on Wednesday. A figure above the consensus forecast +0.2% could cushion the yen against further onslaught by the US dollar. On the other hand, a lower figure could trigger greater panic that Japan’s economy may not be on course to recovery, thus exerting downward pressure on JPY.
Elsewhere, the US dollar could launch a counter-offensive on Thursday when the Department of Labor releases data on Initial Jobless Claims and Continuing Jobless Claims for the week ending February 15th. However, higher-than-expected figures will favour the yen. A similar trend will play out when the Census Bureau releases January’s US Core Retail Sales data, which shows consumer spending.
Technical Analysis
USDJPY has found a pivot at 150.10, and the Relative Strength Index (RSI) signals that the upward momentum is likely to continue. Furthermore, the 50 MA is nearing an upward crossover, strengthening the bullish assertion. Action above the 150.10 pivot price will provide momentum for upside movement to the first resistance at 151.00.
Further upside action will likely result in marginal gains, with the bulls testing the 151.40 resistance level. However, a move below the psychological support at 150.00 could fuel a pullback to the first support at 149.70, beyond which 149.30 could be within reach.
USDJPY 30 minute chart