USD/JPY rallies for the second-straight day trading around 115.20

The US dollar extends its rally against the Japanese yen, trading at 115.23, a gain of 0.55% at the time of writing. The investor’s mood has been swinging throughout the day. In the last hour, US equity indices fluctuated between wins and losses, but the USD has been able to hold its ground vs. the safe-haven Japanese yen.

The dollar surge is attributed to Fed hawkishness. On Wednesday, the US central bank kept the Federal Funds Rate (FFR) unchanged around the 0-0.25% range while mentioned that they would hike rates “soon.” Following the release of the monetary policy statement, Fed’s Chairman Jerome Powell said that “the committee is of a mind to raise the federal funds rate at the March meeting assuming that the conditions are appropriate for doing so.”

In the meantime, the US dollar index, which measures the dollar value against a basket of its rivals, advances 1.34%, up to 97.231. Contrarily to the positive performance of the greenback, the US 10-year Treasury yield slides six basis points, from 1.851% to 1,792%

Before Wall Street opened, the US economic docket featured Initial Jobless Claims for the week ending on January 22, fell to 260K from 286K, better than expected after two consecutive weeks of increases. Meanwhile, the Gross Domestic Product (GDP) for Q4 rose by 6.9%, crushing 5.5% expectations, helped by the fiscal policy and Fed accommodative monetary policy.

Later in the day, USD/JPY traders focus would turn to the release of the Consumer Price Index (CPI) in Japan,

USD/JPY Price Forecast: Technical analysis

The USD/JPY is upward biased, as depicted by the daily moving averages (DMAs) residing well below the spot price. At press time, the pair is approaching an upslope trendline drawn from October 2021 swing lows to December ones, broken to the downside on January 13, that will be resistance around 115.30-45 area.

A breach of the latte would expose the YTD high at 116.35, which, once broken, will be followed by January 2017 cycle highs at 118.61, a space of approximately 235-pips.

Contrarily, the USD/JPY first support would be the January 18 daily high, previous resistance-turned-support at 115.00, followed by 114.47, and the 50-DMA at 114.31.