USD/JPY today cleared the last major hurdle before a retest of 150.00.
It has surpassed the 61.8% retracement level of the November-December downturn and is an additional 100 pips above it. It rose 130 pips to 148.50.
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The pair surged from 144.50 at the beginning of the week, gaining 400 pips in a lopsided move. It is now up nearly 800 pips since the beginning of the year as the December recession eases.
Two things drove this:
1) The Bank of Japan lowered expectations for interest rate hikes
The Japanese earthquake was the first event to trigger buying as it was thought to slow January's move. This was followed by a series of disappointing Japanese consumer price index (CPI) numbers, leading some to press the Bank of Japan to potentially raise interest rates.
2) USD benefits from positive data and changing expectations for Fed rate hikes. Today's strong retail sales report confirms that the economy is not in dire need of cuts, which contributed to the dollar's broad continued bid at the beginning of the year.
