USDJPY may extend its gains after Fed minutes spur high expectations.
“Investors expects Federal Reserve to raise interest rates until inflation achieved the target of 2%.”
US dollar cling onto its gains, spurred by Federal Reserve’s latest meeting minutes and strong employment data from the United States. In terms of meeting minutes, Fed officials suggests to prolong the period of rate hikes as US inflation remains stubbornly high. They also noted that recent data did not suggest the case for an extended depreciation in terms of inflation and it may require an extended amount of time to bring it back to their target of 2%. On the other hand, Initial Jobless Claims for last week rose by 192,000, significantly lower than forecast which suggests ongoing robustness in hiring. Nonetheless, fourth quarter GDP which came in lower at 2.7% has place a cap upon greenback for the time being.
USDJPY, Daily: The pair has been testing near 135 for the past several days, showing the struggle between bulls and bears in overcoming one another. Although overall price action suggests further upside in the long-run, USDJPY may experience short-term retracement due to lack of bullish momentum as portrayed in MACD.
Resistance level: 135.00, 142.35
Support level: 127.10, 116.40
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