USD/JPY – H4
All eyes will be on the updated Inflation figures from the US, as January's Consumer Price Index (CPI) is due at 13:30 GMT. The data can determine the pair's next leg and produce outsized moves, so caution is needed.
A high print could strengthen expectations for more and/or larger rate hikes from the US Federal Reserve, although the last release had led USD/JPY lower, despite the fact that headline CPI had surged 7% in December – the highest since 1982.
The US dollar is perky against the Japanese Yen at the start of the European session, ahead of the release, running a profitable week. From here, it has January's five year highs (116.35) in its sight, but it will likely need fresh impetus for a move beyond this level that could open the door towards 117.53.
Despite the upbeat mood, the Relative Strength Index (RSI) points to overbought conditions that could limit the upside and create downward pressure. Furthermore, its previous visit above 116.00 had sparked a steep decline.
The 114,70-90 area contains multiple key levels that can support USD/JPY if a similar scenario as the last CPI release plays out, whereas a break, would put near-term risk to the downside. The aforementioned area contains the upper border of the Daily Ichimoku Cloud, the EMA200 and the ascending trend-line from this year's lows, with the next support located at 114.14.
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.