USD/JPY Forecast: Bullish case firmly in place
|USD/JPY Current price: 110.05
- Japanese data beat expectations, Chinese trade figures mixed.
- US December inflation foreseen stable above Fed’s 2.0% target.
- USD/JPY could extend its gains toward 111.00 during the upcoming sessions.
The USD/JPY pair hovers around 110.00 after peaking early Tuesday at 110.21, its highest since May 2018. The rally was backed by the persistent good mood as the market leaves behind Middle-East concerns, while the focus shifted to the US-China trade relationship. On Monday, a Chinese delegation arrived at Washington for the phase one signing ceremony, scheduled for this Wednesday.
Japan released overnight the November Trade Balance, which posted a smaller than expected deficit, printing at ¥-2.5B vs. the ¥-412.6B forecast, while the Eco Watchers survey on the current situation came in better than anticipated at 39.8. China published its December trade balance, which posted a surplus of $46.79B, below the $48.0B expected.
The US will release today the final versions of December inflation data. The annual reading is foreseen at 2.3% from 2.1% previously estimated, while the core annual CPI is expected to remain unchanged at 2.3%.
USD/JPY short-term technical outlook
The USD/JPY pair is comfortable consolidating around the 110.00 figure, neutral-to-bullish, according to the 4-hour chart. In the mentioned time-frame the pair holds above all of its moving averages, with the 20 SMA maintaining its bullish slope well above the larger ones. The limited intraday range keeps technical indicators directionless, although within positive levels, with no signs of upward exhaustion. The immediate resistance comes at 110.40, the level to break to confirm additional gains toward the 111.00 price zone.
Support levels: 109.70 109.35 108.90
Resistance levels: 110.40 110.75 111.00
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