USD/JPY drops to fresh session low, nearing 108.00 mark post-US CPI

11 Jan 2019

Mostly in-line US inflation figures do little to provide any respite to the USD.
Risk-off mood/sliding US bond yields prompt some weakness in the last hour.

The USD/JPY pair finally broke down of its late Asian/European sesson consolidation phase and refreshed session lows post-US consumer inflation figures.

The US Dollar held on to its softer tone and failed to gain any respite from the recent selling following the release of mostly in line headline US CPI print, showing a 0.1% m/m decline in December. On the other hand, the yearly rate held steady at 2.2% and the core inflation figures also matched consensus estimates, though did little to lend any support to the major. 

Meanwhile, a mildly weaker trading sentiment around equity markets, despite renewed US-China trade optimism, continued underpinning the Japanese Yen's safe-haven status. This coupled with the ongoing slide in the US Treasury bond yields seemed to be one of the key factors behind the pair’s sudden dip of around 20-pips in the last hour.

Technical outlook

Valeria Bednarik, FXStreet's own American Chief Analyst writes: Stuck around the 50% retracement of its 111.41/105.16 decline, the pair retains its bearish short-term stance, as, in the 4 hours chart, it continues developing well below firmly bearish 100 an 200 SMA, while technical indicators gain downward traction below their midlines. 

The 61.8% retracement of the same decline has contained bulls this week at around 109.05, with gains above the level putting the pair in bullish ground.  It will turn negative with more slides expected on a break below the weekly low of 107.76, she added further.

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