USD/JPY Price Analysis: Sticks to intraday gains around mid-150.00s, above 100-period SMA on H4

• USD/JPY recovers from a one-week low touched in reaction to the softer US CPI on Tuesday.
• The dismal Japanese GDP, along with the risk-on mood, undermines the JPY and lends support.
• Bets that the Fed is done raising rates weigh on the US and keep a lid on any further upside.

The USD/JPY pair attracts some dip-buying near the 150.20 area on Wednesday and recovers a part of the previous day's softer US CPI-led losses to a one-week low. Spot prices stick to modest intraday gains through the early part of the European session and currently trade around the 150.65 region, up nearly 0.30% for the day, though lack follow-through.

Data released this Wednesday showed that the Japanese economy contracted for the first time in three quarters, which should allow the Bank of Japan (BoJ) to delay a shift away from the decade-long accommodative monetary policy settings. Apart from this, the prevalent risk-on environment is seen undermining the safe-haven Japanese Yen (JPY) and acting as a tailwind for the USD/JPY pair.

The US Dollar (USD), on the other hand, languishes near its lowest level since September 1 touched in the aftermath of softer US consumer inflation, which reaffirmed expectations that the Federal Reserve (Fed) is done with its policy tightening campaign. This, in turn, holds back bullish traders from placing fresh bets around the USD/JPY pair, warranting caution before positioning for further gains.

From a technical perspective, spot prices showed resilience below the 100-period Simple Moving Average (SMA) on the 4-hour chart and manage to hold above the 150.00 psychological mark. The latter coincides with the 200-period SMA on the 4-hour chart and is followed by an ascending trend-line extending from the October low, around the 149.70 area, which should act as a pivotal point for the USD/JPY pair.

A convincing break below the aforementioned support levels will be seen as a fresh trigger for bearish traders and pave the way for some meaningful downside. The USD/JPY pair might then accelerate the downward trajectory towards the 149.20-149.15 intermediate support en route to the 149.00 round figure.

On the flip side, any subsequent move up is likely to confront some resistance near the 151.00 mark ahead of the 151.20 area and the YTD peak, around the 151.90 area touched on Monday. Some follow-through buying, leading to a strength beyond the 152.00 mark will be seen as a fresh trigger for bullish traders and set the stage for an extension of a well-established uptrend witnessed since the beginning of the current year.

USD/JPY 4-hour chart

Technical levels to watch