USD/JPY up little, struggles to move back above 114.00 handle

Haresh Menghani FXStreet

• US-China trade optimism continues to dent JPY’s safe-haven status.
• Dismal Japanese GDP growth figures remained supportive of the uptick.
• A follow-through USD retracement keeps a lid on any meaningful up-move.

The USD/JPY pair caught some fresh bids on Wednesday, albeit now seemed struggling to make it through/build on the momentum beyond the 114.00 handle.

After yesterday's good two-way price action to finally end the day nearly unchanged, the pair regained some positive traction during the Asian session and remained supported by fresh US-China trade optimism.

Top white house economic advisor Larry Kudlow confirmed that the US is talking with China again on trade issues. The news failed to prompt any fresh risk-on trade but continued weighing on the Japanese Yen's safe-haven status.

The Japanese Yen was further weighed down by dismal domestic data, showing that the economy shrank at an annualized rate of 1.2% in the third quarter and reinforced Bank of Japan’s (BoJ) view that policy needs to stay accommodative for some time.

The uptick, however, lacked any strong conviction/follow-through amid the ongoing US Dollar retracement from over 16-month tops touched earlier this week. After the recent upsurge, triggered by expectations that the Fed will raise interest rates in December, and beyond, the USD bulls took a breather and did little to provide any meaningful impetus to the major.

Moving ahead, traders now look forward to the key release of the latest US consumer inflation figures for some fresh impetus. This followed by the Fed Chair Jerome Powell's scheduled speech during the early Asian session on Thursday might play an important role in determining the pair's next leg of directional move.

Technical levels to watch

The 114.10-20 region might continue to act as an immediate resistance, above which the pair is likely to aim towards testing Oct. monthly swing highs, around the 114.50-55 supply zone. On the flip side, immediate support is now pegged near the 113.60-55 region, which if broken might prompt some additional weakness further towards retesting the 113.00 round figure mark.

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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