USD/JPY rallies to 10-week high as Powell’s comments, China data favored risk-on

• USD/JPY rose to the 10-week high during early Friday.
• The pair benefited from latest risk-on moves after China’s Caixin manufacturing PMI and comments from the Fed’s Powell.
• Successful trading above 111.30/40 highlights 112.00 and 112.20 resistances with 110.90 and 110.50 be the following levels to watch past downside break of 111.30.  

USD/JPY is taking bids around 111.80 during early Asian sessions on Friday. The pair is at the ten-week high as upbeat comments from the Fed Chairman Jerome Powell and welcome data concerning China Caixin manufacturing PMI triggered risk-on sentiment. The pair earlier slipped on better than forecast Tokyo Core CPI figure.

At the start of Friday, the Bank of Japan’s (BoJ) preferred version of inflation gauge, Tokyo Consumer Price Index (CPI) ex Fresh Food increased 1.1% in February against 1.0% forecast on a yearly basis. The release helped limit the pair’s gains during initial trading hours.

However, comments from the Fed Chair Powell mentioning that the US economy is in good shape and continued emphasis on patience for the monetary policy helped trigger the pair’s upside. The pair then managed to extend the rise after China’s Caixin Manufacturing purchasing managers’ index (PMI) as the gauge rose to 49.9 in February compared to 48.5 consensus and 48.3 prior.

While recent risk-on fuelled the USD/JPY pair to ten-week high, traders still face uncertain times when it comes to the US-China deal. Also, the release of US ISM Manufacturing PMI may offer intermediate trade opportunities. The February month ISM Manufacturing PMI is expected to soften to 55.5 from 56.6.

USD/JPY Technical Analysis

Given the pair’s successful trading beyond 111.40 resistance, chances of its additional rise to 112.00 and then to the 112.20 can’t be denied. Though, 112.65 and 113.00 may challenge the buyers afterward.

If the pair drops under 100-day simple moving average (SMA) level of 111.40, also slips under 200-day SMA level of 111.30, 110.90 and 110.50 could lure the sellers.