USD/JPY Bulls to Target 133 on Hawkish Fed Bets

It was a relatively quiet morning for the USD/JPY. February current account figures from Japan drew interest this morning. However, trading volumes are on the light side, with several markets closed for Easter Monday.

The current account balance rose from a ¥1.989 trillion deficit to a ¥2.197 trillion surplus in February. Economists forecast a ¥2.536 trillion surplus. However, the adjusted current account surplus jumped from ¥20.360 trillion to ¥108.920 trillion versus a forecasted ¥1.430 trillion.

While the stats drew interest, further market reaction to the US Jobs Report and increased bets of a 25-basis point Fed interest rate hike supported a USD/JPY breakout this morning.

Later this morning, consumer confidence figures from Japan will also be in focus. However, the numbers are unlikely to force a dollar retreat.

USD/JPY Price Action

This morning, the USD/JPY was up 0.39% to 132.646. A mixed start to the day saw the USD/JPY fall to an early low of 131.832 before rising to a high of 132.649. The USD/JPY broke through the First Major Resistance Level (R1) at 132.501.

Technical Indicators

The USD/JPY needs to avoid a fall through R1 (132.501) and the 132.012 pivot to target the Second Major Resistance Level (R2) at 132.865. A move through the morning high of 132.649 would signal a bullish USD/JPY session. However, Fed chatter must support an extended USD/JPY breakout.

In the case of an extended rally, the bulls would likely test resistance at 133.00 but fall short of the Third Major Resistance Level (R3) at 133.718.

A fall through R1 and the pivot would bring the First Major Support Level (S1) at 131.648 into play. However, barring a dollar sell-off, the USD/JPY pair should avoid sub-131.5 and the Second Major Support Level (S2) at 131.159. The Third Major Support Level (S3) sits at 130.306.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bullish signal. The USD/JPY sits below the 200-day EMA (132.770). The 50-day EMA closed in on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.

A USD/JPY move through the 200-day EMA (132.770) would support a breakout from R2 (132.865) to give the bulls a run at 133. However, a fall through the 100-day (132.335) and 50-day (132.017) would bring S1 (131.648) into view. A fall through the 50-day EMA would send a bearish signal.

The US Session

Looking ahead to the US session, it is a quiet day on the US economic calendar. There are no US economic indicators for investors to consider.

The lack of stats will leave the US Jobs Report and hawkish Fed bets to deliver USD/JPY support. However, investors should track Fed chatter throughout the session.