Forex: USD/JPY still failing at 98.00

FXstreet.com (Barcelona) - The market retracement seen during the Asian and European session after the drop to 95.83 low failed to extend above the 98.00 handle as it peaked at 98.01 high and has been quoting just below that area despite several attempts.

The economic calendar will provide an interesting load of data from the US, including the CPI report, Housing Starts and Industrial Production. “We expect headline CPI to rise by +0.1%/mth, following the chunky +0.7% rise the month before. On an annual basis, favorable base effects lower the rate from 2.0% to 1.7%/yr (mkt 1.6%)”, wrote TD Securities analyst Annette Beacher, expecting also a relatively subdued Core CPI, at +0.2%/mth and 1.7%/yr (mkt 2.0%).

According to Fxbriefs.com analyst Peter Jackson, Philadelphia Fed’s Plosser said he would be uncomfortable saying the Fed won’t engage in asset sales, but he would like to see it happen in an eventual exit from the current Fed stimulus program and the central bank should return to use Fed funds rate as the policy instrument. Also, he wishes to shrink the balance sheet as well as short the duration of our portfolio in all treasuries.

“Hourly indicators are pointing higher, though still in the negative zone, as 55 day EMA caps the upside, while 4h indicators hold negative tone so far does not give much upside potential, unless the price clearly breaks above 98.00/30 barriers that may ease still existing bear-pressure”, wrote Windsor Brokers analyst Slobodan Drvenica, pointing to resistance at 97.89, 98.25 and 98.70, while supports are at 97.27. 97.00 and 96.60.