USD/JPY steadily climbs to 113.75-80 area, fresh daily high ahead of US CPI

USD/JPY gained some positive traction on Friday amid a modest USD strength.
Hawkish Fed expectations, rising US bond yields acted as a tailwind for the USD.
Geopolitical tensions could benefit the safe-haven JPY and cap any further gains.
Traders might also wait for the US CPI report before placing fresh directional bets.

Haresh Menghani FXStreet

The USD/JPY pair edged higher through the mid-European session and climbed to a fresh daily high, around the 113.75-80 region in the last hour.

Following a brief consolidation during the first half of the trading action on Friday, the USD/JPY pair regained positive traction and was supported by a combination of factors. The prospects for a faster policy tightening by the Fed continued acting as a tailwind for the US dollar. Apart from this, a fresh leg up in the US Treasury bond yields further underpinned the greenback and provided a modest lift to the USD/JPY pair.

However, the cautious market mood – amid escalating geopolitical tensions – could extend some support to the safe-haven Japanese yen and cap gains for the USD/JPY pair. There are fears that Russia could invade Ukraine. The United States and its allies have warned Russia of tough sanctions if it again attacks its neighbour. This, along with anxiety ahead of the US consumer inflation figures, weighed on investors' sentiment.

The markets seem convinced that the Fed would adopt a more aggressive policy response to contain stubbornly high inflation and have been pricing in the possibility for an eventual liftoff in May 2022. Hence, the US CPI report will provide fresh cues about the Fed's near-term policy outlook and its strategy on interest rates. This will influence the USD price dynamics and provide a fresh directional impetus to the USD/JPY pair.

Even from a technical perspective, the recent two-way price moves witnessed over the past four trading sessions points to indecision among traders. This further makes it prudent to wait for a sustained strength beyond the 114.00 mark before placing fresh bullish bets around the USD/JPY pair and positioning for any meaningful upside.

Technical levels to watch

USD/JPY

Overview
Today last price	113.76
Today Daily Change	0.31
Today Daily Change %	0.27
Today daily open	113.45

Trends
Daily SMA20	113.93
Daily SMA50	113.56
Daily SMA100	111.78
Daily SMA200	110.65

Levels
Previous Daily High	113.81
Previous Daily Low	113.27
Previous Weekly High	113.96
Previous Weekly Low	112.53
Previous Monthly High	115.52
Previous Monthly Low	112.53
Daily Fibonacci 38.2%	113.48
Daily Fibonacci 61.8%	113.61
Daily Pivot Point S1	113.21
Daily Pivot Point S2	112.97
Daily Pivot Point S3	112.67
Daily Pivot Point R1	113.75
Daily Pivot Point R2	114.05
Daily Pivot Point R3	114.29

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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