USD/JPY break above 114.50 opens the door towards 115.00

• USD/JPY steady around 114.20, waits for a fresh catalyst.
• USD/JPY clings to gains, despite the greenback’s weakness across the board.
• From a technical perspective, the USD/JPY is consolidating before printing a leg-up towards 115.00.
• USD/JPY to push above the 115.00 level amid the energy crisis – ING

The USD/JPY barely advances during the New York session, up some 0.02%, trading at 114.22 at the time of writing.  Despite slower than expected economic growth in China, expectations of higher inflation, and central banks reducing the COVID-19 stimulus plan, the market mood is in risk-on mode.

Despite a weaker US dollar, the USD/JPY holds above the 114.00 threshold

The US 10-yeat Treasury yield is flat at press time, clings to 1.581%, whereas the US Dollar Index, which tracks the greenback’s performance against a basket of rivals, slides 0.02%, sits at 93.943. The Japanese yen is close to four-year lows versus the greenback, as higher US T-bond yields, which have been rising lately, have a strong positive correlation with the pair, spurred a rally from 110.00 to 114.46.

The US economic docket featured September Industrial Production data, which contracted 1.3% versus a 0.2% expansion foreseen by analysts. Invertors could largely ignore it, as market sentiment and US T-bond yields remain the main drivers for the pair.

USD/JPY Price Forecast: Technical outlook

The daily chart shows that the USD/JPY pair could consolidate. The Relative Strength Index, a momentum indicator at 75, is in oversold levels and has been there since October 10. Despite the abovementioned, the pair rallied 150 pips towards the 2021 year high at 114.46, but at press time, retraced the move 30 pips, waiting for a fresh catalyst.

The USD/JPY is range-bound within the 114.00 – 114.46 area. A break above the top could pave the way for further gains, with 115.00 as the first supply zone.

USD/JPY: To push above the 115.00 level amid the energy crisis – ING

According to ING analysts: “the USD/JPY pair will also find support from US yields, where our rates team still expect a further rise as market tightening expectations move towards those of the Fed.”

“Japan’s monthly trade balance is expected to widen towards the JPY500 B area. Any wider deficit could provide USD/JPY with the nudge through 115.00 as the market sinks its teeth into the energy dependence story.”