The generalized selling pressure around the greenback has dragged USD/JPY to the 113.20 area, albeit regaining some pips afterwards.

USD/JPY focus on Yellen

Spot has given away part of yesterday’s gains and is now keeping the trade within the weekly range, with gains so far capped around Monday’s peaks near 114.20 and some decent support emerging in the 113.25/20 band.

US money markets, particularly yields of the 10-year benchmark, remain almost the exclusive driver of the pair’s price action in recent periods in spite of today’s divergence so far.

The recent pick up in the risk-on sentiment following the Trump-Abe meeting over the weekend has collaborated with the pair’s up move to fresh tops beyond 114.00 the figure at the beginning of the week, although the cautious-to-bearish note surrounding the greenback today keeps USD/JPY depressed below 113.50.

Later in the NA session, Yellen’s testimony before the Senate Banking Committee will grab all the attention, seconded in relevance by speeches by Richmond Fed J.Lacker (2018 voter, hawkish), Dallas Fed R.Kaplan (voter, centrist) and Atlanta Fed D.Lockhart (who will step down at the end of the month).

USD/JPY levels to consider

As of writing the pair is retreating 0.29% at 113.40 facing the next support at 112.84 (low Feb.10) followed by 111.98 (38.2% of the November-December up move) and then 111.57 (low Feb.7). On the upside, a break above 114.17 (high Feb.13) would open the door to 115.02 (55-day sma) and finally 115.39 (high Jan.15).