USD/JPY 'at the 114.00 gates' - Fed's Yellen's Congressional testimony eyed

Currently, USD/JPY is trading at 113.91, up +0.33% or 37-pips on the day, having posted a daily high at 114.15 and low at 113.43.

The American dollar vs. Japanese yen experienced renewed buying interest on Friday after an optimistic and relevant summit between President Trump and Japan's PM Abe. Furthermore, the pair diluted, at least for now, all bearish pressure that had dollar bulls 'against the ropes' for almost 8-consecutive trading sessions as the evidence pointed to expect a robust close and open below 112.00 level; never happened.

On the other hand, bulls seem confident and thrilled as Fed's Yellen is next with her well-anticipated 'Congressional testimony' which covers 3-key issues for market participants: economic assesment; Where is the US economy now and heading to?, then Fed's balance sheet; When is it going to be addressed?, and finally fiscal policy impact on monetary policy (Trump's Agenda, now rebranded 'phenomenal tax'); How tax proposals may change interest rates hikes?.

Hence, the week ahead on the political front and US economic docket seem jam-packed, therefore, if last week's US dollar later performance serves as any relevant indicator, then the odds are in its favor. 

USD/JPY rebound could extend to 114.50 – UOB

Historical data available for traders and investors indicates during the last 7-weeks that USD/JPY pair had the best trading day at +1.76% (Jan.18) or 201-pips, and the worst at -1.65% (Jan.05) or (190)-pips.

Technical levels to consider

In terms of technical levels, upside barriers are aligned at 113.94 (high Feb.1) - prices need to close and open above it to clear the level, then at 114.98 (50-DMA) and above that at 116.85 (high Jan.11). While supports are aligned at 111.58 (low Feb.7), later at 110.06 (100-DMA) and below that at 107.20 (200-DMA). On the other hand, Stochastic Oscillator (5,3,3) seems to continue north. Therefore, there is evidence to expect further US dollars gains in the near term.

On the long term view, if 118.59 (high Jan.1) is in fact, a medium-term top, the upside seems limited for the pair at 115.55 (short-term 61.8% Fib). To the downside, supports are aligned at 111.64 (long-term 50.0% Fib), then at 109.19 (short-term 38.2% Fib) and finally below that at 105.26 (short-term 23.6% Fib). Also, 112.37 (short-term 50.0% Fib) would be a new support as long as prices close above it.

Yellen’s testimony: an opportunity for USD-bulls?