USD/JPY off 6-week tops, corrects in sync with DXY

Amid holiday-thinned trading, the USD/JPY pair paused its five-day winning streak and moved slightly away from six-week highs posted at 112.90 in early Asia.

Over the last hours, the spot is seen consolidating yesterday’s heavy gains fueled by a hawkish FOMC statement, which increased odds of a June Fed rate hike. A June Fed rate hike bets, as reflected by the CME FedWatch tool, rose to 76% post-Fed statement.

The retreat in USD/JPY is mainly driven by a corrective slide in the US dollar against its main competitors after the recent upsurge, while negative Asian equities and poor Chinese services PMI data spurred moderate risk-aversion and underpinned the safe-haven bids for the yen.

All eyes now remain on the US jobless claims, factory orders and trade balance data due later today for fresh incentives on the spot. In the meantime, sentiment on the global equities and USD dynamics will drive the prices.

USD/JPY Technical levels                 

A break above 112.90 (6-week tops) would expose 113.36 (classic R2/ Fib R3) and 113.50 (Mar 17 high). On the other hand, a breach of support at 112.50/49 (100-DMA/ daily pivot) could yield a test of 112.13 (5-DMA) and 111.54 (10-DMA).