USD/JPY analysis: upward potential limited below 114.55
|USD/JPY Current price: 114.26
The USD/JPY pair surged to 114.49, its highest since late January, reversing course following Yellen's hawkish statement before the US Congress. The FED's head woke up speculation of a March rate hike after saying that "at our upcoming meetings, the committee will evaluate whether employment and inflation are continuing to evolve in line with these expectations, in which case a further adjustment of the federal funds rate would likely be appropriate." The USD/JPY pair traded with a soft tone at the beginning of the day, as risk aversion dominated the Asian session, following news that US President Donald Trump's national security advisor Michael Flynn quit, over his contacts with Russia, a clear sign of how vulnerable the pair is to any headline coming from the US new administration. The modest tone of worldwide equities is keeping the upside limited, and technically, a major resistance stands a few pips above the mentioned high, at 114.55, the 23.6% retracement of this year bullish run. A break above it could fuel the advance, but technical readings in the 4 hours chart, don't support the case, as the price is unable to advance beyond a bearish 200 SMA, whilst technical indicators are retreating within positive territory, not enough anyway to confirm a downward move.
Support levels: 113.95 113.40 113.00
Resistance levels: 114.55 114.90 115.40
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