FxWirePro: USD/JPY Daily Outlook

Chart - Courtesy Trading View
 

• USD/JPY has paused a 3-day bullish streak and is consolidating at multi-month highs, outlook remains bullish. 
   
• The pair tested levels unseen since Jan 2017, further gains on the cards as technical indicators also support further upside.
   
• US President Joe Biden reappointed Federal Reserve Chair Jerome Powell for a second term, strengthening bets for interest rate hikes. 
   
• FOMC minutes on Wednesday showed policymakers readiness to speed up the taper of their bond-buying programme if high inflation held.
   
• Further data released overnight showed readings on the labour market and consumer spending outstripped forecasts, while inflation continued to heat up.
   
• US data hinted at stubbornly high inflationary pressures and soon-to-come Federal Reserve action to counter its effects on the economy.
   
• The Bank of Japan has maintained one of the most dovish monetary policy stances among major central banks, while the Fed is turning hawkish.
   
• Monetary policy divergence is likely to act as a major tailwind for the pair, driving prices higher.

Major Support Levels: 

S1: 114.94 (5-DMA)

S2: 114.22 (21-EMA)

S3: 113.58 (Weekly low)

Major Resistance Levels: 

R1: 115.52 (Fresh yearly high)

R2: 116

R3: 116.66 (88.6 Fib)

Summary: USD/JPY trades with a bullish bias. Scope for test of 116 levels. Bullish invalidation only below 21-EMA.