The USD/JPY pair struggled to build on to its recovery move and has now retreated around 40-pips from session peak.
Currently hovering around 115.00 psychological mark, the pair lacked follow through buying interest as investors continue to reposition themselves ahead of the key event risk, Donald Trump’s inauguration speech, which would set the course for the US Dollar's medium-term trajectory.
Meanwhile, hawkish comments from Philadelphia Fed President Patrick Harker, that three rate-hikes seem appropriate in 2017 and that US inflation would hit the central bank's 2% target this year or in 2018, helped the pair to hold in positive territory for the third consecutive session.
Nevertheless, the pair seems all set to snap four consecutive weeks of losing streak and post first weekly gain in 2017, unless Trump fails to deliver on the promised fiscal policies.
Technical outlook
Valeria Bednarik, Chief Analyst at FXStreet notes, "Bullish only above 115.60. The USD/JPY pair retreated modestly during the Asian session, but held above 114.50, the 23.6% retracement of the November/December rally, recovering the 115.00 level"
She further writes, "the 1 hour chart shows that the 100 SMA heads higher a few pips above the mentioned Fibonacci support, whilst technical indicators keep retreating from overbought readings, gaining bearish momentum, but within positive territory. In the 4 hours chart, a bearish 100 SMA caps the upside around 115.60, whilst technical indicators pull back from overbought readings, suggesting the recovery may extend only on a break above this last."
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