USD/JPY drops to fresh session lows below 112 on Bullard comments
|The USD/JPY pair, which lost its bullish momentum near the 113 handle in the early NA session, came under a renewed selling pressure and fell below the 112 mark. As of writing, the pair is trading at 111.97, losing 0.28% on the day.
The latest blow to the greenback came from the St. Louis Fed President James Bullard. Speaking at the Official Monetary and Financial Institutions Forum’s City Lecture in London, Bullard said that given that the U.S. economy remains in a low-growth, low-inflation, low-interest-rate regime, the current level of the federal funds rate target was appropriate. He further added that many future developments could impact this policy path, but the Fed does not need to act pre-emptively with respect to any of them.
- Fed's Bullard: Current level of the policy rate is appropriate
- Fed's Bullard: Inflation breakevens suggest Fed is being too hawkish
Following Bullard's comments, the US Dollar Index dropped to its lowest point since late September at 95.35 and is now sitting at that level, losing 0.44% on the day.
The economic calendar will feature the unemployment and the CPI reports from Japan in the Asian session. Later in the day, Fed's favorite inflation gauge, Core Personal Consumption Expenditure Price Index, and Personal Income/Spending data from the U.S. will be looked upon for fresh impetus before the markets wrap up the week.
Technical outlook
With this recent fall, the RSI indicator on the 4-hour chart just dropped below the 50 mark, suggesting that the bearish momentum is building up in the near-term. The pair could encounter the first technical support at 111.45 (100-DMA) ahead of 110.95 (20-DMA) and 110 (psychological level). On the upside, resistances align at 112.40 (200-DMA), 112.90 (daily high) and 113.75 (May 16 high).
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