USD/JPY: waiting for a catalyst to break higher

USD/JPY Current price: 112.02

• Upbeat Chinese data kept the mood high in Asia.
• Range trading continues ahead of Thursday's first-tier data.

The USD/JPY pair surpassed its yearly high by a few pips to hit 112.16 overnight, underpinned by upbeat Chinese figures and dismal Japanese figures. China's Retail Sales rose by 8.7% YoY in March, while Industrial Production increased by 8.5% in the same period, both beating the market's expectations. More relevant, Chinese Q1 GDP printed 6.4% matching the previous quarter outcome, and above the expected 6.3%. On the contrary, Japanese Industrial Production increased by just 0.7% MoM in February, half the market's estimate, and decreased by 1.1% from a year earlier.

The pair was unable to hold on to gains and returned to trade around the 112.00 figure, as, despite the positive mood, equities barely reacted, with Asian and European indexes hovering around their opening levels with uneven results. The US calendar will remain scarce today, without relevant data, as it will only offer February Trade Balance. Market players are waiting for Thursday's data, which will put an end to the week ahead of Good Friday's holiday.

From a technical point of view, the pair retains the neutral-to-bullish stance in the short term, as, in the 4 hours chart, it holds around a bullish 20 SMA, while the 100 SMA is about to cross above the 200 SMA far below the current level. Technical indicators, however, remain directionless, the Momentum around its 100 level and the RSI at 60. The absence of a strong catalyst could see the pair surpassing the high by a few pips before returning to its usual range, with a clearer breakout more likely Thursday. Meanwhile, the risk will remain skewed to the upside as long as the price holds above the 111.80 level, the immediate support.

Support levels: 111.80 111.50 111.20

Resistance levels: 112.15 112.50 112.85

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