USD/JPY Rate Remains Under Pressure Despite Hawkish Fed Rhetoric

FX Talking Points:

USD/JPY Remains Under Pressure Despite Hawkish Fed Rhetoric, RSI Flirts with Oversold Territory.

USD/CAD Rate Outlook: Bull-Flag or Near-Term Exhaustion?

DailyFX TableUSD/JPY Table

USD/JPY stays underneath vigour even as Federal Reserve officials validate a hawkish opinion for financial policy, and a dollar-yen sell rate stands during risk for serve waste as a bearish movement appears to be entertainment pace.

Fresh remarks from Cleveland Fed President Loretta Mester have unsuccessful to furnish a suggestive greeting even yet a 2018-voting member on a Federal Open Market Committee (FOMC) insists that ‘if mercantile conditions develop as expected, we’ll need to make some serve increases in seductiveness rates this year and subsequent year, during a gait identical to final year’s.’ The comments advise a FOMC is on march to exercise 3 rate-hikes in 2018, though a updates to a U.S. Consumer Price Index (CPI) might clap expectations for a pierce in Mar as both a title and core rate of acceleration are approaching to tardy in January.

At a same time, a apart news is projected to uncover U.S. Retail Sales augmenting a extrinsic 0.2% following a 0.4% enlargement in December, and a collection of muted information prints might drag on a greenback as it dampens a opinion for enlargement and inflation.

In turn, it might be usually a matter of time before dollar-yen tests a 2017-low (107.32), with a downside targets on a radar generally as a Relative Strength Index (RSI) extends a bearish arrangement from late final year and flirts with oversold territory. Want some-more insight? Sign adult join DailyFX Currency Strategist Christopher Vecchio LIVE to cover a U.S. CPI report.

USD/JPY Daily Chart

USD/JPY Daily Charts

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  • Near-term opinion for USD/JPY stays slanted to a downside as a bear-flag unfolds, with a mangle of a 2017-low (107.32) lifting a risk for a some-more suggestive run during a Fibonacci overlie around 106.70 (38.2% retracement) to 107.20 (61.8% retracement).
  • Need to see a RSI trip behind subsequent 30 to preference a serve decrease in USD/JPY, with a subsequent downside segment of seductiveness entrance in around 105.40 (50% retracement).
  • However, a dissimilarity might start to take figure should a RSI destroy to pull into oversold territory.

USD/CAD Table

USD/CAD trades on a firmer balance following a churned greeting to a 88.0K decrease in Canada Employment, though a near-term opinion stays dark with churned signals as a span struggles to reason above a former-support section around 1.2620 (50% retracement).

Keep in mind, a new collection of muted information prints might do small to derail a Bank of Canada (BoC) from serve normalizing financial process as a 49.0K enlargement in full-time practice reinforces a executive bank’s comment ‘that work marketplace tardy is being engrossed more fast than anticipated,’ and Governor Stephen Poloz and Co.. might continue to ready Canadian households and businesses for aloft borrowing-costs as ‘the mercantile opinion is approaching to aver higher seductiveness rates over time.’ As a result, a change in USD/CAD function might continue to take figure in 2018, though a broader opinion for USD/CAD has indeed perked adult as a Relative Strength Index (RSI) breaks out of a bearish arrangement carried over from late final year, though

Nevertheless, new cost movement suggests a allege from a February-low (1.2256) is losing traction as it fails to extend a array of higher-highs from progressing this month, with a span during risk of confronting range-bound conditions as a RSI appears to be flattening out forward of overbought territory.

USD/CAD Daily Chart

USD/CAD Daily Chart

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  • Topside targets are still on a radar for USD/CAD, with a subsequent topside aim entrance in around 1.2720 (38.2% retracement) to 1.2770 (38.2% expansion), though a fibre of unsuccessful attempts to tighten above a 1.2620 (50% retracement) raises a risk for a near-term pullback in a sell rate.
  • First downside area of seductiveness comes in around 1.2440 (23.6% expansion) to 1.2510 (78.6% retracement) followed by a 1.2350 (38.2% expansion) region.

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— Written by David Song, Currency Analyst

To hit David, e-mail dsong@dailyfx.com. Follow me on Twitter during @DavidJSong.

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