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USD/JPY Rally Gathers Pace, 117.00 Presents Resistance

Aayush Jindal

Aayush Jindal

Key Highlights

  • USD/JPY climbed above the 115.00 and 115.50 resistance levels.
  • There is a major bullish trend line forming with support near 115.20 on the 4-hours chart.
  • EUR/USD is struggling below 1.1480, and GBP/USD could rally above the 1.3600 resistance.
  • The US CPI increased 7.5% in Jan 2022 (YoY), up from 7%.

 

USD/JPY Technical Analysis

The US Dollar formed a base above the 113.50 level against the Japanese Yen. USD/JPY started a major increase and cleared many hurdles near 114.80.

Looking at the 4-hours chart, the pair even settled above the 115.00 level, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours).

The pair gained pace for a move above the 115.50 resistance zone. It even spiked above the 115.80 level. However, the pair is now facing a strong resistance near the 116.20 and 116.50 levels. If there is a close above 116.50, the pair could surge towards 117.00 or 117.50.

If not, there could be a downside correction to 115.20. There is also a major bullish trend line with support near 115.20 on the same chart. Any more losses might push the pair to 114.50.

Fundamentally, the US Consumer Price Index for Jan 2022 was released yesterday by the US Bureau of Labor Statistics. The market was looking for an increase of 7.3% compared with the same month a year ago.

The actual result was above the market forecast, as the US Consumer Price Index increased 7.5% in Jan 2022 (YoY). The monthly change was +0.6%, similar to the last reading.

Looking at EUR/USD, the pair is still struggling to clear the 1.1480 resistance level. Similarly, GBP/USD must settle above 1.3600 to start a fresh increase.

Economic Releases

  • UK GDP for Q4 2021 (QoQ) - Forecast +1.1%, versus +1.1% previous.
  • UK Industrial Production for Dec 2021 (MoM) - Forecast +0.1%, versus +1.0% previous.
  • UK Manufacturing Production for Dec 2021 (MoM) - Forecast +0.1%, versus +1.1% previous.
  • German Consumer Price Index for Jan 2022 (YoY) – Forecast +4.9%, versus +4.9% previous.
  • German Consumer Price Index for Jan 2022 (MoM) – Forecast +0.4%, versus +0.4% previous.