USDJPY Approaches Cycle Highs

Yesterday's US services ISM bolstered the US dollar when the sector improved more than expected, printing 58.3 in March, up from 56.5 previously. The prices paid subindex also rose, suggesting inflation pressures in the economy are not easing. 

US bonds remain under pressure, pushing their yields to new cycle highs, as the yield curve has inverted again, implying a possible recession in the following quarters. 

Later on Wednesday, the FOMC minutes from the March Fed meetings will be published, probably confirming the ongoing hawkish bias among the FOMC members. At its next meeting in April, the Fed is expected to deliver a 50bps rate hike as the central bank remains widely behind inflation. 

The short-term support could be found at the uptrend line from last week's lows, currently near 123.10. So as long as the USD trades above it, the short-term trend seems bullish. 

The next target for bulls will likely be at the current cycle highs of 125. If bulls push the price above that level, massive stop losses should be triggered, probably sending the greenback toward 126.