The USD/JPY pair rallied in the short term and it seems determined to approach and reach new highs. It's trading at 133.09 at the time of writing far above today's low of 131.49. You knew from my previous analysis that the currency pair could extend its upwards movement as the DXY is bullish while the Yen Futures is bearish.
Today, the Japanese economic data came in mixed. The Prelim GDP rose by 0.2% versus the 0.5% growth expected, Prelim GDP Price Index registered a 1.1% growth matching expectations, while Revised Industrial Production surged by 0.3% even if the traders expected a 0.1% drop.
Still, the US inflation data represented the most important event. The CPI m/m reported a 0.5% growth in the last month as expected, while the Core CPI surged by 0.4%. So, the US reported higher inflation in January compared to December which means that the Fed should take action.
USD/JPY Strongly Bullish!
Technically, USD/JPY dropped a little after reaching 132.87 but it has failed to reach and retest the weekly pivot point of 131.37. Now, it has edged higher and it has ignored the median line, 131.87 static resistance, and the R1 (132.94).
Stabilizing above the broken upside obstacles may announce strong buyers and a potential upside continuation.
USD/JPY Forecast!
Closing and stabilizing above the R1 of 132.94 and above the median line (ml) may announce further growth. Testing and retesting the broken levels or a small consolidation is seen as a long signal. The R2 (134.48) could represent an upside target if the rate continues to grow.
