Feb 12 (Reuters) - FX traders should beware that USD/JPY's latest recovery attempts this week will likely run out of steam due to solid technical resistance that will prove hard to crack.
The dollar held mostly steady against other major currencies on Wednesday as traders awaited U.S. inflation data, though remarks from Federal Reserve Chair Jerome Powell a day earlier lifted U.S. yields and lent some support against the yen.
A recent USD/JPY bear-trap under the 151.06 Fibo, a 76.4% retrace of the 148.65 to 158.88 (December to January) EBS rise, has fuelled a recovery. A bear trap is set when a market breaks below a technical level but subsequently reverses, which is usually a bullish sign.
Gains on Wednesday have hit 153.89 so far. However the thick
daily cloud that currently spans the 153.60-155.63 region, will
likely limit the upside. Also 14-day momentum remains negative,
highlighting the residual underlying downside risk to eventually
probe last week's 150.93 low.
Daily Chart:
(Martin Miller is a Reuters market analyst. The views expressed are his own)
