- Strong US retail sales data dampened bets on a Fed rate cut in March.
- The probability of a rate cut in March decreased to 61% from 65.1% on Tuesday.
- Investors have steadily reduced bets on the hawkish Bank of Japan.
Thursday’s USD/JPI forecast maintains a bullish stance, remaining bullish despite a slight pullback. The dollar, which is holding close to a one-month high against its major rivals, drew strength from robust US retail sales data, which dampened expectations for a March Fed tapering.
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Moreover, the probability of a rate cut in March decreased to 61% from 65.1% on Tuesday, according to CME’s FedWatch Tool. Notably, the dollar hit 148,525 yen overnight, a level not seen since late November. Investors have been steadily reducing bets on the hawkish Bank of Japan, partly affected by the recent New Year’s earthquake in central Japan. The BOJ will hold a policy meeting next week on Monday and Tuesday.
Meanwhile, Shoki Omori, chief Japan strategist at Mizuho Securities, said the dollar yen could fluctuate between 145 and 150 in the near term. This range was last seen in mid-November. Furthermore, if the BOJ maintains its dovish stance next week and Fed Chairman Jerome Powell is hawkish at the US central bank’s policy meeting this month, Omori suggested the greenback could rise above 150 yen by early February.
In addition, he said Japanese officials could start coming in and verbally intervening at any time” to stop the yen from falling.
USD/JPI Key Events Today
- Initial US Unemployment Claims
USD/JPI Technical Forecast: Price hits wall of resistance at 148.25
On the charts, the price of USD/JPI has reached a ceiling at the key resistance level of 148.25 and is pulling back. However, the bullish bias is strong as the indicators on the chart indicate a strong bullish trend. Notably, the price respected the 30-SMA as support, bouncing higher each time to make a new high. Moreover, the RSI, which has remained above 50 since the bulls took over, is currently overbought.
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Cena made a series of swings and falls. The most recent swing high is paused at 148.25. Therefore, the next move is likely to be a momentum low to retest the 30-SMA support. From there, bulls could target the 150.02 resistance level.
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