Chart - Courtesy Trading View
- USD/JPY has paused a 3-day bullish streak and is consolidating at multi-month highs, outlook remains bullish.
- The pair tested levels unseen since Jan 2017, further gains on the cards as technical indicators also support further upside.
- US President Joe Biden reappointed Federal Reserve Chair Jerome Powell for a second term, strengthening bets for interest rate hikes.
- FOMC minutes on Wednesday showed policymakers readiness to speed up the taper of their bond-buying programme if high inflation held.
- Further data released overnight showed readings on the labour market and consumer spending outstripped forecasts, while inflation continued to heat up.
- US data hinted at stubbornly high inflationary pressures and soon-to-come Federal Reserve action to counter its effects on the economy.
- The Bank of Japan has maintained one of the most dovish monetary policy stances among major central banks, while the Fed is turning hawkish.
- Monetary policy divergence is likely to act as a major tailwind for the pair, driving prices higher.
Major Support Levels:
S1: 114.94 (5-DMA)
S2: 114.22 (21-EMA)
S3: 113.58 (Weekly low)
Major Resistance Levels:
R1: 115.52 (Fresh yearly high)
R3: 116.66 (88.6 Fib)
Summary: USD/JPY trades with a bullish bias. Scope for test of 116 levels. Bullish invalidation only below 21-EMA.