FxWirePro: USD/JPY edges higher but bearish outlook persists

• The USD/JPY edged higher   but gains were limited as traders remained on alert to the prospect of a coordinated currency intervention by authorities in the U.S. and Japan.

  • The yen has dominated currency market attention, surging as much as 3% in two sessions following speculation over coordinated rate checks by the U.S. and Japan   typically seen as a warning sign ahead of intervention.

• In an analysis released on Tuesday, the BOJ said the weak yen is having a growing impact on Japan’s inflation not only by raising import costs but also through second-round effects such as the pass-through of labour costs.

• Data on Tuesday showed a key indicator of Japan’s services sector prices rose 2.6% year-on-year in December, underscoring how labour shortages are driving firms to pass on rising costs.

•The increase in the services producer price index, which tracks the price companies charge each other for services, followed a 2.7% gain in November, Bank of Japan data showed.

• Immediate resistance is located at 155.83(Jan 26th high), any close above will push the pair towards 156.37 (38.2%fib).

•  Support is seen at 153.95(50%fib) and break below could take the pair towards 153.00 (Psychological level)

Recommendation: Good to sell around 154.60, with stop loss of 155.70 and target price of 154.00