#USDJPY @ 128.585 is auctioning sideways below 128.50, volatility is expected amid hawkish commentary from Fed Williams. (Pivot Orderbook analysis)

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• USD/JPY is auctioning sideways below 128.50, volatility is expected amid hawkish commentary from Fed Williams.
• Fed Williams is favoring more interest rate hikes
• to bring inflation down to 2%.
• The Japanese Yen has remained muted amid mix Japanese inflation report.

The pair currently trades last at 128.585.

The previous day high was 128.93 while the previous day low was 127.76. The daily 38.2% Fib levels comes at 128.21, expected to provide support. Similarly, the daily 61.8% fib level is at 128.49, expected to provide support.

The USD/JPY is juggling in a narrow range below the critical resistance of 128.50 in the early Tokyo session. The asset has not displayed any power-pack action after the release of the mixed National Consumer Price Index (CPI) report for December month.

Japan’s National headline CPI has landed at 4.0%, lower than the consensus of 4.4% but higher than the former release of 3.8%. While the core inflation that excludes oil and food prices has soared to 3.0% higher than the expectations of 2.9% and the prior release of 2.8%. National CPI that excludes fresh food has remained in line with the estimates at 4.0%.

A rising trend has been recorded in Japan’s inflation, which bolsters the case of exiting from the decade-long ultra-loose monetary policy by the Bank of Japan (BoJ). Japanese officials and BoJ Governor Haruhiko Kuroda and his teammates have been chattering about a shift in policy stance after stability in wage growth and economic prospects.

Meanwhile, the risk appetite of the market participants is improving again as the S&P500 futures are showing signs of reversal after recording negative returns consecutively for the past three trading sessions. The 10-year US Treasury yields have scaled above 3.40% as Federal Reserve (Fed) policymakers are expecting the continuation of a higher interest rates scenario for a longer period.

The US Dollar Index (DXY) dropped to near 101.60 but could find support as the hawkish commentary from New York Fed Bank President John Williams could trigger uncertainty. Fed policymaker cited that “With inflation still high and indications of continued supply-demand imbalances, it is clear that monetary policy still has more work to do to bring inflation down to our 2% goal on a sustained basis”, as reported by Reuters.

Technical Levels: Supports and Resistances

USDJPY currently trading at 128.38 at the time of writing. Pair opened at 128.44 and is trading with a change of -0.05 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 131.28, 50 SMA 134.98, 100 SMA @ 140.2 and 200 SMA @ 136.7.

The previous day high was 128.93 while the previous day low was 127.76. The daily 38.2% Fib levels comes at 128.21, expected to provide support. Similarly, the daily 61.8% fib level is at 128.49, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 127.82, 127.2, 126.65
• Pivot resistance is noted at 128.99, 129.55, 130.16

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