USD/JPY trying to recover after US CPI numbers
Sentiment deteriorated on Thursday as the coronavirus outbreak seems far but contained and investors took profits from the recent rally in risk assets, which drove equities lower along with the USDJPY pair.
Traders then turned their attention to US CPI numbers. After jumping in December, analysts expected a modest acceleration in headline consumer prices and a small slowdown in core prices, but the headline CPI printed hotter than expected at 2.5% year-on-year (despite only rising 0.1% month-on-month) - that is the hottest since October 2018.
Services inflation is running at 3.1% on a yearly basis (the last time it was higher was August 2016) while goods prices are deflating when compared to the previous year.
The USDJPY pair ticked higher after these numbers but was still trading 0.35% weaker on the day, spotted at around 109.70. It looks like the 110 threshold is unconquerable by bulls.
The support is now seen at today's lows of 109.630 and if not held, further decline toward 109.550 could occur. However, the more major support could be located at 109.20, where previous swing highs are located.
On the upside, the resistance is still at around the psychological level of 110.00 and if the pair decisively breaks this selling zone, we could see a quick rally toward 111.00.
Author
Axiory Global Research Team
Axiory Global Ltd.
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