USD/JPY: after limited recovery, consolidates near weekly lows

The US dollar trimmed some of its losses against the yen during the American session but is still down for the day and headed toward the first weekly loss after gaining during the previous four. 

USD/JPY consolidates below 112.00

USD/JPY bottomed after the release of US data at 111.67, the lowest in two weeks. Reports included the CPI that rose 0.5% in September (against the +0.6% expected) while retail sales jumped 1.6% (vs 1.7%). The lower-than-expected inflation reading weakened the greenback across the board. The US dollar received some support later from the University of Michigan Consumer Sentiment survey that showed its headline rising to 101.1, its highest level in more than 13 years. 

At the moment of writing the pair is hovering around 111.90 consolidating modest daily losses and almost 80 pips below the level it closed last week. A reversal in the price of US bonds pushed the pair to the downside. Today the US 10-year yield dropped further today after US data to 2.277%, the lowest since September 27. Last Friday it peaked at 2.40% (5-month high). 

US Retail Sales: Strong auto sales drive September growth - Wells Fargo

US CPI and retail sales support December rate hike story - ING

Levels to watch 

The pair is holding below the 112.20 support area signaling further weakness ahead. The next support could be seen at 111.45 (Sep 25 & 26 low), followed by 111.05 (Sep 20 low). On the upside, resistance levels might be located at 112.10 (Oct 12 low), 112.30 (Oct 13 high) and 112.60 (Oct 11 high). 

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