USD/JPY Price Analysis: Steady around the 50-DMA at 113.70s

The USD/JPY barely advances during the New York session, trading at 113.75 at press time. The financial markets sentiment is downbeat as investors seem to be waiting on the Federal Reserve monetary policy decision, to be unveiled on Wednesday.

Before Wall Street opened, the US Bureau of Labor Statistics (BLS) reported the Producer Price Index for November. The numbers came at 9.6% on an annual basis, higher than the 9.2% expected. The Core PPI rose by 7.7%, up from the 7.2% foreseen by analysts.

That data would mount additional pressure on the Federal Reserve to tighten economic conditions faster than expected. Money market futures have fully priced in at least three rate hikes by the end of 2022.

USD/JPY Price Forecast: Technical outlook

The USD/JPY has remained range-bound within the 113.21-113.95 area in the last six days. Further, the pair has been seesawing in each side of the 50-day moving average (DMA), showing that market participants do not have a clear bias as the year-end approaches. Nevertheless, the Japanese yen looks vulnerable, as the greenback, supported by the recent hawkish rhetoric led by Chair Jerome Powell, diverges from the Bank of Japan’s current monetary policy. 

That said, the USD/JPY has an upward bias, though it would need to break above 113.95 to cement an upward move towards 2021 year-to-date highs, around 115.52.

In the event of breaking to the upside, the first resistance would be 114.00, followed by the October 20 cycle high at 114.70. A breach of the latter would expose 115.00.

On the other hand, any downward moves would be capped at the 113.00 figure. A break below that level would expose the November 30 pivot low at 112.53, then the 100-DMA at 111.87.