- USD/JPY continues to decline in a Dollar-bear environment.
- US CPI figures weighing down the Greenback.
USD/JPY is trading lower but choppy with thinning volumes heading into the European markets, with the pair playing close to 106.40.
The US Dollar dump continued yesterday following a positive beat to US inflation data, with the month-over-month CPI printing an expectation thumping 0.5% increase for January. With strength behind the Japanese Yen continuing to grow, USD/JPY broke through a key barrier to trade at 14-month lows.
With the pair closing lower for six of the past eight trading days and the USD selling off steadily, USD/JPY has cleared every major support level and is now poised for freefall unless confidence in the Greenback suddenly returns or the Bank of Japan can successfully talk the markets out of buying the Yen. Daily candles have Fibo retracement levels at 107.90 (38.2) and 108.88 (61.8) if a reversal is priced in around this area, while a continuation of the selloff will see the pair trading into the consolidation established in the third quarter of 2016.
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