USD/JPY extends Yellen-inspired rally, climbs to near 3-week highs

The USD/JPY pair built on Tuesday's up-move, led by growing expectations for higher US interest rates, and touched nearly 3-week high at 114.60 level. 

Tuesday's hawkish comments from the Fed Chair Janet Yellen, offering an upbeat outlook for the US economic health, revived hopes for a Fed rate-hike action at March meeting and supported the US Dollar's appreciating move. 

In addition to this, positive sentiment around equity markets, pointing towards improving investors' risk appetite, is weighing on the Japanese Yen's safe-haven appeal and further collaborating to the pair's up-move to the highest level since late Jan. 

Today's release of the US CPI print and monthly retail sales data would now be looked upon for additional bullish traction during early NA session. Later during the day, the Fed Chair Janet Yellen's second day of testimony before the House Financial Services Committee and FOMC member Harker’s speech will also remain in the limelight.

Technical levels to watch

A follow through buying interest above 114.70 level is likely to lift the pair towards 50-day SMA hurdle near 115.00 psychological mark above which a fresh bout of short-covering could extend the upward trajectory towards 114.40 level (Jan. 27 high).

Meanwhile on the downside, weakness below 114.25-20 area now seems to find immediate support at 114.00 round figure mark, which if broken seems to drag the pair back towards 113.75 intermediate support ahead of 113.55-50 strong support.