USD/JPY Recovers After Dropping Below 150 Yen per Dollar
FXOpen
As the USD/JPY chart shows:
→ Yesterday, the pair fell below the psychological level of 150 yen per dollar.
→ However, today it staged a strong recovery, rising back above this level.
The yen weakened following the release of Japan's inflation data. According to Forex Factory, the National Core CPI increased by 3.2% year-over-year (forecast: 3.1%, previous: 3.0%).
According to Reuters:
→ The 19-month high in CPI strengthens expectations of further interest rate hikes in Japan.
→ The yen is weakening as Bank of Japan Governor Kazuo Ueda stated that the central bank may step up government bond purchases if long-term interest rates rise.
Can USD/JPY Continue to Rise?
USD/JPY Technical Analysis
On 12th February, we noted that key highs and lows over the past three months formed an ascending channel, with the 154 yen per dollar level acting as a resistance barrier.
Indeed, since then, bulls have failed to sustain levels above 154 yen per dollar (as indicated by the arrow), leading to a decline below the lower boundary of the blue channel after a brief rebound on 18th February.
As a result, the former support at the lower boundary of the blue channel may now act as resistance around 151.3 yen per dollar, reinforcing the relevance of the descending channel (marked in red).
The trajectory of USD/JPY today could be significantly influenced by the release of the US Flash Manufacturing PMI and Flash Services PMI indices at 16:45 GMT+2.
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