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