- USD/JPY recaptures 114.00 amid resurgent US dollar demand.
- Markets expect Fed to shift to the hawkish pivot, hinting at a March rate hike.
- 50-DMA is the level to beat for bulls while above the critical support at 113.72.
USD/JPY is bouncing back above 114.00, having found fresh buyers once again near the 113.70 region.
The latest uptick in the major could be associated with the resurgent demand for the US dollar across the board, as investors prefer holding the buck heading into the Fed’s interest decision, the first of 2022 and expected to be a hawkish one.
The US central bank is likely to hint at a March rate hike while expressing concerns over hotter inflation. The Treasury yields are also attempting a comeback amid hawkish Fed expectations, adding to the upside in the major.
Markets have shifted their attention from the Russia-Ukraine crisis to the Fed verdict, as the risk sentiment remains elevated in European trading. The S&P 500 futures are up 0.88% on the day while the Euro Stoxx 50 Index is higher by 1.95% so far.
USD/JPY: Technical outlook
USD/JPY’s daily chart shows that the price has once again bounced from the two-month-old ascending trendline support at 113.72.
The rebound needs acceptance above the horizontal 50-Daily Moving Average (DMA) at 114.30 to confirm a meaningful recovery.
The next stop for bulls is seen at the January 20 highs of 114.54.
USD/JPY: Daily chart
The 14-day Relative Strength Index (RSI), however, remains below the 50.00 level, indicating that any bounce is likely to remain shallow.
Daily closing below the abovementioned key support of 113.72 will trigger a fresh downswing towards the bullish 100-Daily Moving Average (DMA) at 113.35.
That cap will be the line in the sand for the bullish traders.
USD/JPY: Additional levels to consider