USD/JPY retreats from highs post-Yellen

USD/JPY leaped to its two-week high at 114.73 following J. Yellen’s statements but rapidly reversed its earnings. At the moment the pair is up 0.12% at 114.58.

Yellen points to a March rate hike

Fed’s Chairwoman Janet Yellen, said that a rate increase next meeting would likely be appropriate if Fed determines that data on employment and inflation are continuing to move in line with expectations. Following Yellen’s remarks, markets are pricing the probability of a rate hike at 82%, according to CME Group FedWatch Tool.

Regardless of the initial reaction, the pair is staying in its daily trading channel with the daily high at 114.73 and the low at 114.06. The greenback – tracked by the US Dollar Index – is having a difficult time moving back above 102. 

Technical outlook

Technical resistances for the pair are aligned at 114.75 (daily high), 114.95 (Fed. 15 high) and finally 115.36 (Jan. 27 high). On the downside, the first could be found at 113.80 (50-DMA), followed by 113.40 (20-DMA) and 113 (psychological level).

Fed's Yellen: Rate hike at next meeting "would likely be appropriate" if data is good enough