USD/JPY rallies but still lacks conviction before a break of 114.80

USD/JPY has sky rocketed on the back of the dollar king reminding us who is the boss. The majority of the sessions overnight were harbouring a softer dollar as markets continue to feel disappointed by the let down that was the Trump trade as well as a potential hike from the Fed as soon as March - both of which have been set back by performance in the US economy and the order of which Trump intends to support and improve the US economy with domestic fiscal policy. 

However. Fed speakers came to the rescue at the Wall Street close with Fed's Williams (a non-voting member and usually Hawkish) saying that he sees a March hike getting more serious consideration and Fed's Dudley saying that the case for a rate hike is more compelling while Fed's Harker repeated comments that three hikes in 2017 are appropriate. We now await Trump's address to Congress today that will be streaming from 2pm Sydney time, 9pm Eastern, 2am GMT and the market will be looking for his fiscal plans and their timings.

USD/JPY levels

USD/JPY is still within a range and only a move through 113.80 might change the state of play otherwise. A break on to the 114 handle and above 114.80 changes the game play to a bullish scenario. "A close above the 115.62 19th January high is needed to reintroduce scope to the key short-term resistance offered by the 16-month resistance line at 117.91," argued analysts at Commerzbank, adding, " Only below 111.59 would introduce scope to Fibonacci support at 109.92 and, if seen, the 200 day ma at 107.69."