The USDJPY pair was trying to jump beyond the psychological level of 110,00 on Tuesday, but so far unsuccessfully and traders kept defending this major level.
Earlier in the day, traders focus on the US inflation numbers. The headline CPI rose 2.3% year-on-year (below the 2.4% expected), but above November's 2.1%. This was the highest reading since October 2018. Core CPI also rose 2.3% on a yearly basis (as expected). The month-on-month numbers disappointed somewhat. Rising inflation might lead to some repricing in the rate expectations for the year 2020. The USDJPY pair was still close to eight-month highs after the data.
From other news, investors remain optimistic as the trade deal is about to be signed tomorrow (Wednesday), while the US has already lifted the "currency manipulator" tag it gave China six months ago.
Technically speaking, the pair is now fighting for the major threshold. If the price closes decisively above the 110.00 level, we could see further upside potential, with the next resistance in the 111.00 area.
Alternatively, should investors start taking profits from the recent strong rally, a decline toward 109.70 might occur, where previous highs are located. This is the major support for the pair and as long as the greenback remains above it, the short-term outlook seems bullish.
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