- In anticipation of US GDP data and the initial jobless claims on Thursday, USD/JPY is trading sluggish.
- As headlines on tensions between Russia and Ukraine ease, Asian markets are cautiously optimistic.
- A rise in risk appetite causes DXY to oscillate.
Despite the absence of disheartening headlines relating to the Russian-Ukrainian crisis, the USD/JPY price hovers around 115.00 heading towards the opening of the European session.
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The US Bureau of Economic Analysis will release its quarterly gross domestic product (GDP) data on Wednesday and the US Labor Department’s initial jobless claims on Thursday, as there is no data in the US registry on Wednesday.
Market estimates predict US GDP will be 6.9% and initial jobless claims will be 235k respectively this quarter, down from 7% and 248k last quarter.
After western leaders imposed sanctions on Russia, the USD/JPY recovered from Tuesday’s low of 114.50. According to reports, the Federal Reserve (Fed) may not pursue aggressive policy tightening at the March Monetary Policy Committee (MPC) meeting due to the negative events in the Russian-Ukrainian struggle. Furthermore, increased sanctions against Russia will likely increase oil prices, resulting in higher production costs and lower prices for end products. Thus, higher inflation expectations could pose a threat to the Fed.
As a result of these developments, the major currency is trading in a tight range between 114.99 and 115.13 at the start of the European session.
While Asian markets rallied on Wednesday, the US Dollar Index (DXY) traded sluggishly, giving investors a surface boost to risk appetite.
Japan’s Bureau of Statistics will release Tokyo CPI data on Thursday. In addition, market participants will also watch initial jobless claims data on Thursday.
USD/JPY price technical analysis: Consolidating in a tight range
The USD/JPY remains locked between the 50-period and 20-period SMAs on the 4-hour chart. The volume is slowly declining. The average daily range is only 20% so far. It shows that the pair is looking for a catalyst to trigger the breakout. A shakeout bar followed by an upthrust bar shows a rangebound behavior. There is no clear direction at the moment.
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On breaking the congestion of 20-period and 200-period SMAs around 114.80, the pair is prone to test the 114.00 area. On the upside, 115.41 is the key resistance being a Fibonacci 50% retracement level.
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Saqib Iqbal
