USD/JPY: a hard way to the upside
USD/JPY has finally managed to break above the formation within which it has been trading in December and January. However, the pair failed to settle above the key 120 yen level.
The greenback was let down by the disappointing US retail sales data which showed that advance to the 125 yen mark will be harder and slower than they thought.
On Monday during the Asian session Japan will release figures for the Q4 GDP. Japanese economy will probably recover after the previous dip. This will provide another reason to sell the pair, because it will lower the possibility of further stimulus from the Bank of Japan. There recently have been reports that some members of the regulator are against additional monetary stimulus. The situation may become a little bit clearer on Wednesday when the Bank of Japan will conduct a meeting and a press conference.
Later on Wednesday watch the release of the Federal Reserve’s January meeting minutes. Hints on the Fed’s staying on hold for a longer period of time will increase negative pressure on USD, while proposals to start raising rates sooner will make traders buy American currency. Support is at117.30, 116.90 and 115.85. Resistance lies at120.50, 120.80 and 121.80.