USD/JPY reverses from 3-month highs and falls below 114.00

• Spot rejected again from above 114.00
• USD weaker after data and Fed speculation
• Trump leaning toward Powell as next Fed’s Chair

USD/JPY hit a fresh 3-month high after US GDP data and then turned sharply to the downside. It fell below 114.00 and bottomed at 113.69, a new daily low. At the time of writing, was trading at 113.85, marginally lower for the day, back in the range of the previous days.

Up on data, down on Fed and yields

Data from the US released today included a better-than-expected Q3 GDP reading (3.0% vs 2.5%) while later, the consumer confidence index came in below estimates at 100.7 and the consumer expectations index also missed expectation at 90.5. The GDP report boosted the greenback but not for a long time.

US bond yields remained steady after the data and recently turned lower, offering support to the Japanese currency and pushed USD/JPY to the downside.

Another bearish impulse came after rumors that US President Trump mentioned that he was leaning toward Jerome Powell to lead the Fed. Powell is an FOMC member considered by analysts as dovish.

Technical levels to watch

USD/JPY was again unable to break the 114.30/50 zone that limited the upside in April and July. A consolidation on top would clear the way to more gains in the medium term. That is a key barrier that currently prevents the pair to make a strong rally.

The US dollar continues to consolidate at monthly highs and so far no clear signals of a correction have emerged. For the next hours, immediate support might be seen at 113.65; below here attention would turn to 113.30: a break lower would expose 113.00.