USD/JPY rallies to fresh three-year highs around 113.30

USD/JPY breaks above 113.00 level non seen since December 2018.
High US T-bond yields and broad US dollar strength are the main drivers of the USD/JPY pair.
The Federal Reserve prospects of bond tapering remain intact, despite an awful NFP report.

Christian Borjon Valencia FXStreet

The USD/JPY is soaring during the New York session, trading at 113.38, up 1.03% at the time of writing. The risk-on environment, as witnessed by US stock indices trading in the green, post gains between 0.43% and 0.86%. Also, the US T-bond yields, with the 10-year benchmark note rate rising above the 1.60% threshold, exert upward pressure on the USD/JPY pair.

The US Dollar resilience continues despite a dismal US Nonfarm Payrolls report

Additionally, the US Dollar Index that tracks the greenback’s performance against its rivals is advancing 0.16%, currently at 94.24, weighing on the Japanese yen and boosting the buck.

On Friday, the US Nonfarm Payrolls report was worse than expected, but August’s upward revision has kept the prospects of a Federal Reserve bond taper announcement alive. Further, US stock indices closed with losses, and US T-bond yields rose, reinforcing the abovementioned, as investors did not buy the dip, as they got ready for an easy money cycle coming to an end.

On the macroeconomic front, on Tuesday, the Japanese economic docket will feature the Producer Price Index monthly and yearly and the Bank Lending on an annual basis for September. Concerning the US, the JOLTS Job Openings for August, and the Atlanta Federal Reserve President Raphael Bostic, could add a fresh catalyst for USD/JPY traders.

USD/JPY Price Forecast: Technical outlook

Daily chart

The USD/JPY is trading well above the daily moving averages (DMA’s), above 113.00, supporting the upside bias. Momentum indicators like the Relative Strenght Index (RSI) are at 75, suggesting that the pair is oversold, so a consolidation or a correction towards 113.00 might be on the cards.

On the way north, December 2018, swing highs around 113.50 is the first resistance level. A break of the latter could open the way for further upside action. The following supply zone would be 114.00, and then September 2018 swing highs around 114.55.

KEY ADDITIONAL LEVELS TO WATCH

USD/JPY

Overview
Today last price	113.38
Today Daily Change	1.16
Today Daily Change %	1.03
Today daily open	112.22

Trends
Daily SMA20	110.63
Daily SMA50	110.18
Daily SMA100	110.13
Daily SMA200	108.65

Levels
Previous Daily High	112.25
Previous Daily Low	111.51
Previous Weekly High	112.25
Previous Weekly Low	110.82
Previous Monthly High	112.08
Previous Monthly Low	109.11
Daily Fibonacci 38.2%	111.97
Daily Fibonacci 61.8%	111.79
Daily Pivot Point S1	111.74
Daily Pivot Point S2	111.25
Daily Pivot Point S3	110.99
Daily Pivot Point R1	112.48
Daily Pivot Point R2	112.74
Daily Pivot Point R3	113.22

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

EUR/USD holds losses below 1.1850 ahead of FOMC Minutes

EUR/USD stays on the back foot below 1.1850 in the European session on Wednesday, pressured by renewed US Dollar demand and reports that ECB President Lagarde will step down before the end of her term. Traders now look forward to the Minutes of the Fed's January monetary policy meeting for fresh signals on future rate cuts.

GBP/USD defends 1.3550 after UK inflation data

GBP/USD is holding above 1.3550 in Wednesday's European morning, little changed following the UK Consumer Price Index (CPI) data release. The UK inflation eased as expected in January, reaffirming bets for a March BoE interest rate cut, especially after Tuesday's weak employment report.

Gold retains bullish bias amid Fed rate cut bets, ahead of Fed Minutes

Gold sticks to modest intraday gains through the early European session, reversing a major part of the previous day's heavy losses of more than 2%, to the $4,843-4,842 region or a nearly two-week low. That said, the fundamental backdrop warrants caution for bulls ahead of the FOMC Minutes, which will look for more cues about the US Federal Reserve's rate-cut path.

Pi Network rally defies market pressure ahead of its first anniversary

Pi Network is trading above $0.1900 at press time on Wednesday, extending the weekly gains by nearly 8% so far. The steady recovery is supported by a short-term pause in mainnet migration, which reduces pressure on the PI token supply for Centralized Exchanges. The technical outlook focuses on the $0.1919 resistance as bullish momentum increases.

Mixed UK inflation data no gamechanger for the Bank of England

Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.

Top 3 Price Prediction: Bitcoin, Ethereum, and Ripple face downside risk as bears regain control

Bitcoin, Ethereum, and Ripple remain under pressure on Wednesday, with the broader trend still sideways. BTC is edging below $68,000, nearing the lower consolidating boundary, while ETH and XRP also declined slightly, approaching their key supports.