USD/JPY falls more than 250 pips after US CPI
- US inflation slows more than expected in November.
- Japanese yen soars across the board following the report.
- USD/JPY drops below 135.00 to one –week lows.
The USD/JPY collapsed after the release of US inflation data. The pair dropped from 137.60 to as low as 134.60, reaching the lowest level in a week and approaching the multi-month low of 133.58.
Inflation slows down, FOMC meeting
The US Consumer Price Index rose in November by 0.1%, below the 0.3% of market consensus. The annual rate fell from 7.7% to 7.1%, reaching the lowest level in almost a year. Inflation numbers eased expectations about the future path of Fed rate hikes.
Following the numbers the US dollar collapsed across the board and the Japanese Yen soared, boosted by a rally in Treasuries. US bond yields sank with the US 10-year falling from 3.60% to 3.43%. The DXY is falling by 1.15% under 104.00.
On Wednesday, the Federal Reserve will announce its decision on monetary policy. A 50 basis points rate hike is expected. New macroeconomic forecast will be released. Powell will hold a press conference.
USD/JPY looking at the recent low
The sharp decline in USD/JPY damaged significantly the outlook for the Dollar. Price is back under the 200-day Simple Moving Average. Currently is testing the 135.00 area and a break under 134.60 would expose the next support around 134.10. Below attention would turn to the monthly low at 133.60.
Technical levels
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
