USD/JPY up 0.64% on the day at 113.62, eyes on Fed

USD/JPY is testing the upside towards the 200 SMA with a series of bullish sticks on the one hour chart. Currently, USD/JPY is trading at 113.62, up 0.64% on the day, having posted a daily high at 113.96 and low at 112.64.

ISM employment index and ADP point to strong Jan payrolls - ING

 The move so far is a correction of the downward trend from the 115 handle where resistance held the cross on three occasions since the first week of January. The yen is picking up on a risk-off play because of Donald Trump's priorities not being as favorable for Global markets and indeed the U.S. dollar. 

The market is behaving in stark contrast to what we had anticipated from a Trump presidency at the start of this year where markets had otherwise been speculating that Donald Trump would have prioritized pro-business policies and fiscal spending first and putting American workers back to work, creating an inflationary environment for which the Federal Reserve would need to stay on their toes and battle with a steepening yield curve. Similarly, global equities were expected to have been buoyed by increased fiscal spending in the United States economy. 

Meanwhile, the Bank of Japan left interest rates on hold, no surprises there, but the key takeaway is that the bank of Japan is in no hurry to taper and its ambition is to take inflation beyond the 2% target. Today we are anticipating the FED to leave interest rates on hold, and in turn, we will turn to the accompanying statement for any indications as to how the committee members may or may not be concerned with regards to Trump at the helm.

FOMC meeting: How could Trump's protectionism affect FED´s decisions?

USD/JPY levels

USD/JPY needs to get above the 115 handle and a convincing break through 115.34 (imoku 2) to alleviate downside pressure, as noted by analysts at Commerzbank:

"Key short term resistance is the 16 month resistance line at 118.26. Only below 111.98 would trigger losses to the base of the cloud, which lies at 109.92 and, if seen, we look for this to hold (this is also the 50% retracement of the move up from November)."