USD/JPY analysis: slowly grinding higher, Japan inflation and US GDP up next

Valeria Bednarik FXStreet

USD/JPY Current price: 114.02

Japan Tokyo and National inflation seen little changed from previous month.
US advanced Q3 GDP will likely have a larger effect on the pair this Friday.

The USD/JPY pair recovered ground in the past US session to settle around the 114.00 level, amid broad-based dollar's strength, following a mostly dovish ECB, which helped equities to regain the ground lost on Wednesday. Bond yields, lately the main motor of USD/JPY, recovered in the American afternoon after being under pressure earlier on the day, following ECB's decision to cut its bond purchases in half starting next January. In the US, the 10-year note benchmark is up to 2.45%, barely above the 2.44% from Wednesday. The Japanese calendar has been quite scarce so far this week, but the country will publish today is Tokyo and National inflation figures, hardly a short-term market mover, but a longer-term indication on where the BOJ is headed. Given that CPI is expected little changed from previous readings, and well below the central bank's 2% target, seems unlikely that the pair will post a strong reaction to it, as market players will rather wait for US advanced Q3 GDP before making decisions on the cross. From a technical point of view, the pair is now neutral-to-positive, as technical indicators lost upward strength, but remain within positive territory, while the price is well above its 100 and 200 SMAs, with the shortest presenting limited directional strength.

Support levels: 113.60 113.20 112.75

Resistance levels: 114.05 114.40 114.85

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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