The dollar rose across the board on optimistic remarks from Fed chair Yellen, ahead of her testimony to Congress later today.
Yellen said that strengthening of the US economy will warrant continues interest rate increases and weak inflation is seen transitory with expectations for gradual increase of interest rate to be appropriate.
Despite Yellen did not talk about the timing of next rate increase, markets took her comments as bullish shift from the recent release of minutes of last FOMC meeting when a number of Fed’s policymakers expressed their concerns about stubbornly low inflation.
USDJPY pair surged through strong barrier at 111.68 (200SMA) which capped the action in past few days.
Extended bullish acceleration dented next resistance at 112.00 (falling Tenkan-sen), turning focus towards next pivot at 112.32 (Fibo 38.2% of 114.73/110.83 downleg).
Close above 200SMA will be initial signal of basing and extended recovery while sustained break above Fibo barrier at 112.32 would generate firmer bullish signal for stronger recovery and test of daily cloud top (112.74) which marks next pivotal point, violation of which would confirm reversal.
Res: 112.32; 112.74; 113.00; 113.24
Sup: 111.68; 111.35; 111.02; 110.81
