USD/JPY – Yen in Holding Pattern as Markets Monitor Yellen Testimony

The Japanese yen is unchanged on Wednesday, as USD/JPY trades in the high-118 range in the European session. There are no Japanese releases on Wednesday. In the US, Federal Reserve head Janet Yellen continues a second day of testimony in Congress. We’ll get a look at New Home Sales during the day, with the markets expecting a softer reading in the January report.

Janet Yellen testified before a Senate committee on Tuesday, saying that the Fed was “unlikely” to raise interest rates in the next few months, given current economic conditions. Her remarks seemed aimed at quelling rising speculation about a rate hike sometime in mid-2015, which has helped boost the US dollar’s performance against its major rivals. Yellen noted that the continuing growth should lead to the unemployment rate continuing to fall. The Fed Chair will resume testimony before the House Financial Services Committee on Wednesday, but it’s not likely that Yellen will say anything which will shake up the markets.

Earlier in the week, BOJ minutes indicated that some BOJ policymakers were concerned about the pace of the BOJ’s monetary easing scheme, which involves increasing base money by 80 trillion yen/year. As inflation remains at low levels, there is concern that the BOJ’s inflation target may not be realized. The BOJ’s radical easing program has ravaged the yen, which continues to trade close to the 120 level.

USD/JPY for Wednesday, February 25, 2015

USD/JPY February 25 at 12:30 GMT

USD/JPY 118.82 H: 118.87 L: 118.62

USD/JPY Technical

• USD/JPY edged lower in the Asian session, testing support at 118.69. The pair is unchanged in European trade.
• 118.69 is a weak support line. 117.49 is stronger.
• 119.83 is a strong resistance line.
• Current range: 118.69 to 119.83

Further levels in both directions:

• Below: 118.69, 117.49, 116.69, 115.56 and 113.83
• Above: 119.83, 120.63, 121.69 and 122.19

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in long positions on Wednesday, reversing the trend seeing a day earlier. This is not consistent with the pair, which is unchanged on Wednesday. The ratio has a majority of long positions, indicative of trader bias towards the US dollar breaking out and moving to higher ground.

USD/JPY Fundamentals

• 15:00 US Federal Reserve Chair Janet Yellen testifies in Congress.
• 15:00 US New Home Sales. Estimate 471K.
• 15:30 US Crude Oil Inventories. Estimate 3.6M.

*Key releases are highlighted in bold

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.