- USD/JPY lost its traction in early American session on Tuesday.
- US Dollar Index turned negative on the day below 92.50.
- Core CPI inflation in US rose less than expected in August.
After spending the first half of the day moving sideways above 110.00, the USD/JPY pair lost its traction in the early American session and was last seen losing 0.1% on the day at 109.88.
USD struggles to find demand after inflation report
The renewed selling pressure surrounding the greenback seems to be the primary driver of USD/JPY weakness. After the data published by the US Bureau of Labor Statistics revealed that the annual Core Consumer Price Index (CPI) declined to 4% in August from 4.3% in July, the US Dollar Index (DXY) turned south. As of writing, the DXY was down 0.3% at 92.33.
Furthermore, the benchmark 10-year US Treasury bond yield, which gained as much as 1% earlier in the day, is now losing 0.7%, putting additional weight on USD/JPY's shoulders.
Commenting on the CPI figures, "the publication came eight days before the Federal Reserve announces its decision and it cements a "no-taper" announcement," said FXStreet Analyst Yohay Elam. "Fed Chair Jerome Powell had already indicated he is in no rush to reduce the Fed's $120 billion/month bond-buying scheme in his Jackson Hole speech. Tapering may have to wait longer."
US Inflation Quick Analysis: Team Transitory wins, dollar loses, why the trend may extend.
In the meantime, US stock index futures started to push higher following the US inflation data, suggesting that Wall Street's main indexes are likely to open in the positive territory. In case risk flows start to dominate the financial markets, the USD could find it difficult to stage a rebound and cause USD/JPY to end the day in the negative territory.
Technical levels to watch for
|Today last price||109.88|
|Today Daily Change||-0.11|
|Today Daily Change %||-0.10|
|Today daily open||109.99|
|Previous Daily High||110.16|
|Previous Daily Low||109.84|
|Previous Weekly High||110.45|
|Previous Weekly Low||109.62|
|Previous Monthly High||110.8|
|Previous Monthly Low||108.72|
|Daily Fibonacci 38.2%||110.04|
|Daily Fibonacci 61.8%||109.96|
|Daily Pivot Point S1||109.83|
|Daily Pivot Point S2||109.67|
|Daily Pivot Point S3||109.51|
|Daily Pivot Point R1||110.15|
|Daily Pivot Point R2||110.32|
|Daily Pivot Point R3||110.48|
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