USD/JPY spikes to 111.35 after upbeat US GDP

The USD/JPY pair finally seems to have broken out of the European session consolidative trading range and spiked to 111.30-35 band following the release of US Q4 GDP print. 

The pair caught some bids after the US economic growth for the final quarter of 2016 was revised to show an annualize growth of 2.1%, up from 1.9% reported previously and 2.0% expected. 

The data reaffirmed Wednesday's hawkish rhetoric from Fed officials that the incoming data points to solid fundamentals of the US economy and thus supports the case of gradual Fed rate-hikes in 2017, which eventually provided an additional boost to the greenback's recovery move. 

The US Dollar Index, however, struggled to build on to its momentum above the key 100.00 psychological mark on slight disappointment from the the US initial weekly jobless claims, coming-in at 258K as against consensus estimates pointing to a drop to 248K.  

Nevertheless, today’s upbeat US GDP print remained supportive of the pair's move back closer to mid-111.00s immediate hurdle. 

With the US macro data out of the way, focus now shifts to speeches from coupled of FOMC members - Dallas Fed President Robert Kaplan and San Francisco Fed President John Williams.

   •  US: Attention to shift towards Fed speak - TDS

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet notes, "pair’s rejection at 111.38 - 23.6% Fib retracement of the drop from 115.50-110.11 and 111.34 (downward sloping 4-hour 50-MA), coupled with the fact that treasury yields remain near one-month low indicates the spot is likely to break below the critical support of 111.14 and extend losses to 110.77 (Bollinger band support) and to 110.00 levels …if the GDP is revised significantly lower."

"On the higher side, only a daily close above 111.60 (Feb low and a stiff support earlier) would signal bearish invalidation and open doors for 113.10 (50-DMA)" he added.