USD/JPY: holds onto the 114 handle after strong drift post dovish ECB

DXY higher on the back of Central Bank divergence and positive progress on US tax reform.
ECB announcements were dovish.

Ross J Burland FXStreet

Currently, USD/JPY is trading at 114.07, up 0.08% on the day, having posted a daily high at 114.17 and low at 113.94.

Q3 GDP, advance estimate preview - Nomura

The DXY got a boost overnight from a number of supporting factors ahead of tonight's GDP for the US economy. The instigator was the ECB fuelling the already better bid greenback on a dovish taper announcement.

ECB: Dovish taper - BBH

Politics were also a driver with tax reform progress being made. US 10yr treasury yields initially rose from 2.41% to 2.46%, while 2yr yields initially rose from 1.58% to 1.62%. Fed fund futures yields remained elevated, pricing the chance of a December rate hike at 95%. The US dollar index is up 0.9% on the day. USD/JPY rose from 113.30 to 114.00.

Wall Street regains some ground, poised to resume rally on Friday

USD/JPY levels

Support levels: 113.60 113.20 112.75
Resistance levels: 114.05 114.40 114.85

Valeria Bednarik, chief analyst at FXStreet explained that from a technical point of view, the pair is now neutral-to-positive: "Technical indicators lost upward strength, but remain within positive territory, while the price is well above its 100 and 200 SMAs, with the shortest presenting limited directional strength."

The FXStreet Technical Confluences Indicator highlights strong resistance above at 114.20 where a number of technical indicators align. However, tougher resistance is shown higher on the handle at 114.75, and a break there could introduce scope to the 118.60/66 January high, according to analysts at Commerzbank.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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