USD/JPY Bullish on Yellen Statement

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USD/JPY Bullish on Yellen Statement

9:00 AM (EST) Update

USD/JPY Daily: Bullish sentiment testing above key resistance and Ichimoku Cloud.

Technical Analysis

The US dollar jumped further up versus the Japanese Yen after forming a spinning top, confirming above the Ichimoku cloud  and signaling further rallies. After ranging inside an extended triangle for over 5 months, the dollar-Yen pair finally broke above a very important psychological level at 121.50 and reached  our first bullish target of 125.48, followed by an expected pullback. Now the pair is back on rallying with the RSI heading up above the neutrality area.

Economic Points

US Side

While our overall long term view is bullish for Ms. USA, today’s jump could have to do with Federal Reserve head Janet Yellen who announced this morning that they remain on track to raise rates this year; as long as the economy evolves as expected. You gotta love Janet’s smooth talking!

She is all set to appear before the House Financial Services Committee to delivery a monetary policy report later Wednesday. In her prepared testimony, she said the U.S. has made progress, but labor market conditions are “not yet consistent” with maximum employment.

Forex Divas (and Divaos)  will eye her testimony closely, looking for clues on how the Fed sees the U.S. economy—and therefore when it may start to raise interest rates.

So far we’ve had positive Producer Price Index (PPI) and Industrial Production numbers this morning. Janet better be happy.

Japan Side

Wednesday during the Asian session Bank of Japan (BoJ) decided to keep massive stimulus intact as expected. The board cut fiscal 2015/16 GDP forecast to 1.7 pct (bad for Mr. Japanese yen strength) and slightly cut CPI forecasts but eyes goal being met next year.

Mr.  Kuroda appeared to be upbeat on China’s growth prospects and urged Beijing to continue liberalizing its markets despite the recent stock turbulence.

So basically, same old same old for the Land of Sun.

Forex Trading Idea

Bullish targeting 125.

Alternative scenario: Below 116 look for a trend change.

Where to set your stops and limits:

Support Levels Turning Point Resistance Levels
118 121.50 124
116.50 118 125