USD/JPY: bulls looking for a test of key resistance denied by the bears

On the back of higher US yields when the markets were volatile over the FOMC minutes, USD/JPY was back on the bid towards the 108 handle but efforts were rejected at key resistance again. Currently, USD/JPY is trading at 107.49, down -0.17% on the day, having posted a daily high at 107.79 and low at 107.49.

FOMC Minutes: officials saw an appreciable risk of inflation lag to target

Once the markets had made up their mind that the FOMC minutes are pointing to a faster pace of tightening this year, yields bounced as did the dollar, completely reversing the initial offer and bid in bonds. 

What traders eventually got a grasp of s that the January 30-31 meeting was in fact before the release of the strong figures on average hourly earnings (+2.9%), the better-than-expected readings in the CPIs data and thus those 'concerns' from some members who argued that there was an appreciable risk of inflation lag to target may not have been as prominent at the meeting. 

Fed speakers coming up

Meanwhile, for the day ahead, it looks to be quiet out there despite China that will be arriving back to their desks today. In terms of catalysts, there will be a line up of Fed speakers, starting today withFOMC's Member Kashkari Speech, then Randal Keith Quarles, Raphael W. Bostic tomorrow and Willian C. Dudley on Friday. 

USD/JPY levels

The price was oscillating above that 107.67 Tenkan line but 107.80 was still proving to be a tough resistance guarding 108.00 and sellers emerged to current spot. However, further out, 110.85 is key ahead of and 111.44/50 as being a double Fibonacci retracement that is lining up with a lower and descending 200-D SMA at 111.39.

Valeria Bednarik, chief analyst at FXStreet explained that in the 4 hours chart for the pair shows that the 100 SMA maintains its bearish slope above the current level, while technical indicators retreat from overbought readings. "Yet," she added,  "at the same time that the pair is holding above the 50% retracement of its latest daily slump at 107.20, now the immediate support."