USD/JPY consolidating Wednesday’s strong recovery move

Haresh Menghani FXStreet

The USD/JPY pair retreated few pips from session high level of 114.89 and was seen consolidating previous session's strong recovery move from 7-week lows.

Currently trading around 114.60-65 region, nearly unchanged from yesterday's closing level, the pair on Wednesday witnessed a sharp recovery of over 200-pips and snapped seven consecutive days of losing streak. Yesterday's strong up-move was supported by abating US Dollar selling pressure and surging US treasury bond yields in wake of upbeat US CPI print. Adding to this, hawkish comments from the Fed Chair Janet Yellen reinforced expectations of steeper Fed rate-tightening cycle and provided an additional boost to the greenback's recovery move.

On Thursday, however, a mildly cautious mood in Asian equity market, with the exception of Japan's Nikkei 225, lend some support to the Japanese Yen's safe-haven appeal and hindered further upside for the major.

Later during the day, ECB monetary policy decision, and subsequent presser, might infuse a fresh bout of volatility in the FX market and eventually derive demand for traditional safe-haven assets - like Yen. On the economic data front, the US housing market data - building permits and housing starts, accompanied by Philly Fed manufacturing PMI and initial jobless claims might also help traders to grab some short-term trading opportunities.

Technical levels to watch

A follow through retracement below 114.30 support now seems to find support at 50-day SMA near 114.00 region, followed by a horizontal support near 113.70 level. Sustained weakness back below 113.70 would invalidate Wednesday's strong bounce and seems to turn the pair vulnerable to break back below 113.00 handle and head towards multi-week lows strong support near 112.60 area.

On the flip side, 115.00 psychological mark is likely to act as immediate hurdle, which if conquered is likely to assist the pair to build on to Wednesday's recovery move and head towards 115.45-50 resistance area ahead of 115.75 horizontal barrier.

1 Week
1 Month
1 Quarter

1 Week

Avg Forecast 114.61

42% Bullish
50% Bearish
8% Sideways

Bias Bearish

1 Month

Avg Forecast 115.48

40% Bullish
40% Bearish
20% Sideways

Bias Neutral

1 Quarter

Avg Forecast 117.26

55% Bullish
15% Bearish
30% Sideways

Bias Bullish

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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