USD/JPY drops below 110.00 on renewed USD weakness

  • 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
Daily SMA20 109.89
Daily SMA50 109.95
Daily SMA100 109.82
Daily SMA200 107.99
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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