USD/JPY is currently consolidated below the recent highs of 113.79 on a day that consumer confidence came in for the U.S. at 96.2 vs 94.0 expected. The Yen was weaker in the lead in due to Japanese equities paring back some losses on idea of further easing measures.
Japan Budget: Sales tax hike still on, focus on G7
In other news, James Smith, Economist in Developed Markets at ING Bank, explained that as Japan approved its FY2016 budget, PM Abe defied critics and announced that the 2017 tax hike will go ahead as planned.
“Despite some headlines suggesting that PM Abe could delay the sales tax hike planned for April 2017, he announced that there has been no change in plan. Although an announcement postponing the hike in advance of this summer’s elections looked possible, the decision appears to be fairly definitive; PM Abe said it would take a shock equivalent to a Lehman-style crisis to change course.”
Meanwhile, back to current fundamentals, Yellen is about to make a speech in New York at the Economic Club of New York at 12:20 p.m. The expectations are for Yellen to poor water over the hawkish comments that were presented by a number of voting Fed members recently, after the dovish FOMC outcome. The greenback is softer in the lead up to this event.
USD/JPY levels
Technically, USD/JPY is within familiar ranges, with the 20 sma on the 4hr chart offering support at 113.24 with the 200 sma on the same time frame at 113.04. However, these levels could come under pressure and give way to the 112.80 support, with further give to 112.60, confirming a breakout below the ascending support line in the reversal channel from 110.66 recent 17th March lows. 114.50 is the upside target to meet the 50 dma at 114.58 ahead of 115.20 9th Feb highs and the 116.00 psychological level.
(Market News Provided by FXstreet)
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