Big levels looming large for the Japanese yen
Nov 29 (Reuters) -The yen has extended its recovery versus the dollar, hitting a six-week high of 149.53 (EBS pricing), and looks set to challenge key technical levels when the forex market returns to full strength next week.
Thin holiday markets have not been kind to the dollar and coupled with Bank of Japan (BOJ) rate hike expectations have led to a 3.0% drop in USD/JPY this week.
On the daily chart USD/JPY has key support at the Ichimoku cloud top and 100-day moving average, 149.21 and 149.14, respectively. To the topside the 200-day moving average provides resistance at 152.00.
Tokyo November core inflation beat market expectations with a 2.2% annual rise versus a 1.8% return for October and a 2.1% Reuters poll consensus. The data supports a December rate hike from the BoJ. Traders now see a 60% chance of a December hike. By comparison, the U.S. Federal Reserve is expected to cut rates next month.
For now, the yen looks set to push higher but has technical hurdles to clear. The dollar might also find the going easier when markets return to full strength next week.
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USD/JPY daily candle chart: https://tmsnrt.rs/3VcStjQ
(Peter Stoneham is a Reuters market analyst. The views expressed are his own)
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