USD/JPY: Bears taking charge, looking for a break below the 111 handle

The greenback has sold-off in recent trade with the DXY dropping to a fresh low of 96.54. Markets expect a dovish FOMC meeting next week and futures are pricing in the odds of the Fed remaining on hold for the remainder of the year with the potential to even cut rates in December. 

U.S. data remains mixed

With FOMC speakers in blackout, markets have been focused on the US data releases which, again, were mixed today:

"US data remained mixed. January’s construction data came in better than expected and rose 1.3% m/m (up from a 0.8% decline in the month prior). Durable goods orders rose 0.4% m/m (but were down from 1.3% in the month prior). That said, February’s PPI data undershot expectations with the headline rate easing to 1.9% y/y (from 2.0% last month) with the core measure at 2.3% y/y. There is no evidence of a pick-up in inflation pressures and the Fed’s hope that the steepening in the Philips curve will translate into higher inflation looks increasingly isolated," analysts at ANZ Bank explained. 

USD/JPY levels

Meanwhile, from a techncial perspective, analysts at Commerzbank explained that USD/JPY is downside corrective near term:

"We will have to allow for a deeper retracement to the 55 day ma and the 2 month uptrend at 110.02/109.98, which should hold for an upside bias to be preserved. Immediate resistance is 112.23, the 6 th December low, the 112.43 55 quarter moving average and recent high at 113.71. We have a 5 month resistance line also at 113.14."