USD/JPY: Japanese data ignored as stocks hold the key to sustainable rally

• The Japanese retail sales print below estimates, but hardly have any impact on USD/JPY.
• The pair is at the mercy of the action in the stock markets.

The USD/JPY pair closed well above 106.64 (March 21 high) on Wednesday, signaling a short-term bullish trend reversal. Currently, the pair is trading in a sideways manner around 106.85.

Japanese retail sales rose 1.6 percent in February from a year earlier, missing the estimated a rise of 1..7 percent by a narrow margin. Meanwhile, large retailer's sales increased 0.6 percent, beating the estimated drop of 0.5 percent by a big margin.

However, the data has not had any notable impact on the USD/JPY pair. Moreover, it was the month end and quarter end flows, signs of stability in the US stocks and an upward revision of the US Q4 GDP that lifted the pair on Wednesday

So, the pair will likely remain bid, courtesy of the upbeat US GDP and may move above 107.00 on signs of risk reset in the US stocks.

USD/JPY Technical Levels

FXStreet Chief Analyst Valeria Bendarik says the pair is heading towards 107.30.

"From a technical point of view and in the short-term, the pair is poised to extend its advance, as in the 4 hours chart it´s currently advancing above the 200 SMA for the first time since early January, while technical indicators maintain their bullish slope near overbought readings. The pair will face the next strong resistance at 107.28,  March 13th high."

Support levels: 106.60 106.20 105.75   

Resistance levels:   106.90 107.30 107.70