USDJPY falls deeper in the cloud on soft US CPI data; FOMC verdict eyed

Slobodan Drvenica Windsor Brokers

USDJPY

The pair accelerated lower sharply as the dollar was sold across the board after weak US data. Headline CPI came along with expectations at 2.2% while core CPI missed expectations (m/m 0.1% in Nov vs 0.2% f/c/previous month and y/y 1.7% in Nov vs 1.8% f/c/Oct). Fresh easing penetrated deeper into daily cloud and pressuring strong support at 112.86 (converged 10/55SMA, loss of which would increase downside risk on confirmation of reversal pattern on daily chart. The notion is supported by daily slow stochastic emerging from overbought territory. Weaker than expected US inflation numbers softened pair's near-term sentiment as well as expectations for Fed's rate hike later today. Today's close in red will be seen as negative signal for deeper correction of 110.83/113.74 upleg, with dovish tone from Fed expected to increase the pressure. Conversely, hawkish Fed and close above daily cloud would generate bullish signal for extension of the upleg from 110.83.

Res: 113.57; 113.74; 114.34; 114.45
Sup: 112.86; 112.63; 112.36; 111.95

Interested in USDJPY technicals? Check out the key levels

1. R3 114.13
2. R2 113.95
3. R1 113.72
PP 113.54
1. S1 113.32
2. S2 113.14
3. S3 112.91

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

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