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USDJPY Tracks US Yields Higher, Set to Close Back Above 148.00

FOREX
  • Mixed data in the US this week gave markets little further clarity on the potential path for Fed policy and as such the USD index stands very modestly higher on the week. Early gains however, did see the DXY print a fresh six-week high, keeping short-term momentum bullish at this juncture.
  • It was a volatile week for USDJPY following the Bank of Japan decision, and despite briefly trading down to 146.66, the pair looks set to close back above the 148.00 handle, broadly unchanged for the week. On Friday, some well behaved inflation data from the US saw a very brief selloff to 147.46 lows before a grind higher ensued into the close.
  • The USDJPY trend outlook remains bullish, and sights are on 149.16 next, a Fibonacci retracement. Initial firm support to watch lies at 146.00, the 50-day EMA.
  • The January ECB was unable to garner any significant momentum for the Euro, with EURUSD largely respecting the 1.0820/0920 range, leaving both major pairs to await the FOMC meeting and next week’s US employment data.
  • EURUSD’s bearish theme remains in play for now. A clear break of 1.0822 support would resume the current downtrend, opening 1.0793, a Fibonacci retracement. On the upside, a break of 1.0932 would instead signal scope for a stronger recovery and expose key short-term resistance at 1.0998, the Jan 5 high and a reversal trigger.
  • As well as the aforementioned event risk, the Bank of England meet next week which could test GBP’s relative resilience this year. A clear break of 1.2827 would resume the uptrend and open 1.2881, a Fibonacci retracement. For bears, clearance of 1.2597 would highlight a S/T reversal and signal scope for weakness towards the 1.2500 handle, the Dec 13 low.
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