The USD/JPY pair today crossed the last major hurdle standing in the way of another retest of the 150.00 level.
It rose above the 61.8% retracement of the November-December decline, crossing and adding another 100 pips beyond it. The price rises 130 points to 148.50.
USD/JPY daily
The pair rose from 144.50 at the beginning of the week, rising by 400 pips in a one-way move. Since the beginning of the year, it is now up nearly 800 points as the December slump ends.
Two things prompted it:
1) The Bank of Japan retreated from expectations of raising interest rates
The earthquake in Japan was the first to spark buying as it was thought it would delay any potential move in January. This was followed by disappointing Japanese CPI numbers, with some prompting the Bank of Japan to potentially raise interest rates.
2) The US dollar benefited from strong data and changed Fed rate hike expectations. Today’s strong retail sales report underscores that the economy is not in dire need of cuts, and this has contributed to widespread and sustained demand for the dollar to start the year.