FxWirePro: USD/JPY extends weakness, Japanese Yen rises Ahead of Powell's testimony

Chart - Courtesy Trading View 

USD/JPY was trading 0.16% lower on the day at 135.58 at around 07:20 GMT, extends weakness for the 2nd consecutive session.

The pair slipped lower amid a general greenback weakness, as investors turn cautious ahead of Federal Reserve Chair Jerome Powell’s congressional testimony on Tuesday and Wednesday.

Powell speech will be close watched for further guidance on the US central bank’s tightening plans.

The dollar index (DXY) opened this week 0.12% lower at 104.402, after clocking its first weekly loss since January.

A slew of resilient economic data has stoked market fears the Federal Reserve might return to its aggressive path.

Futures imply a 72% chance the Fed will raise interest rates by 25 basis points at its meeting on March 22.

On the other side, Yen strengthened ahead of the final policy meeting on Friday for Bank of Japan Governor Haruhiko Kuroda.

Further, Bank of Japan Governor nominee Ueda doubled down on the importance of the bank’s ultra-easy monetary policy stance, which could keep the yen under pressure.

Major Support Levels: 

S1: 135.00 (110-EMA)

S2: 134.73 (Cloud top)

Major Resistance Levels: 

R1: 136.08 (5-DMA)

R2: 137.33 (200-DMA)

Summary: USD/JPY has been rejected at 200-DMA. Price action is extending weakness for the 2d straight session and has slipped below 5-DMA.

Oscillators are on verge of rollover from overbought levels. Price action is on track to test daily cloud support. Break below will drag the pair lower.