- USD/JPY extends its decline on the week, down 0.38%.
- US jobless claims rose more than expected, while the Philadelphia Fed fell more than expected.
- Rising tensions from the conflict between Russia and Ukraine increased the appeal of the JPY’s safe haven status.
- USD/JPY Technical Outlook: The break of 115.00 exposed the 114.14 level.
On Thursday, rising tensions between Russia and Ukraine dampened market sentiment, boosting the safe-haven appeal of the Japanese yen against the dollar, as evidenced by the more than 60-pip drop in the USD/JPY. At the time of writing, the USD/JPY is trading at 114.92.
In the last two hours, a “full” US economic docket reported Building Permits, Housing Starts, for January. The former came in at 1.899 million versus 1.76 million, higher than expected, while the latter rose to 1.638 million below 1.7 million. At the same time, initial jobless claims for the week ending February 12 showed an increase of 248,000 from 219,000. Also, the Philadelphia Fed manufacturing index for February declined to 16 versus 20 expected.
Tensions between Russia and Ukraine rise during the overnight session
US economic data aside, developments on the Russia/Ukraine front have dominated the financial market mood.
In the last hour, NATO President Stoltenberg said that NATO is “concerned” about the increase in violations of the ceasefire in Ukraine. Meanwhile, in the US, President Joe Biden said the threat of a Russian invasion of Ukraine is very high. He reiterated that he believed that Putin would invade Ukraine in a matter of days. Also, reports from Ukraine, the Ministry of Defense said that “the shelling by pro-Russian forces ceased at 10:00 GMT.”
Therefore, the escalation of tension boosted the attractiveness of the Japanese yen, as USD/JPY heads towards a high of 114.90, a level last reached on February 2nd.
USD/JPY Price Forecast: Technical Outlook
USD/JPY has a neutral bias but the break of the Feb 14 daily low at 115.00 opened the door for a Feb 2 daily low test at 114.14, but first JPY bulls would need to reclaim the 50 moving average days at 114.73.
However, a change in the market mood could pave the way for a mean reversion move. The first resistance of the USD/JPY would be 115.00. A clear break would expose the Jan 28 daily high at 115.68, followed by 116.00 and the yearly high at 116.35.
Additional technical levels
Source: Fx Street
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