• Softer than expected US CPI print prompts some fresh USD selling.
• Fails to provide any impetus amid easing bearish pressure around equities.
The USD/JPY pair held on to its European session consolidation phase and remained within striking distance of monthly lows, set earlier today post-US CPI.
The headline CPI posted a 0.1% m/m rise and the yearly rate eased to 2.3%, weaker than a fall to 2.4% anticipated. Adding to this, core CPI, which excludes volatile food and energy prices, also fell short of consensus estimates and showed a modest 0.1% m/m rise, with the yearly rate holding steady at 2.2% as against an uptick to 2.3% expected.
Although, the data did little to dampen or reinforce market expectations that the Fed might continue to raise interest rates by the end of this year, and beyond, a sudden drop in the US Treasury bond yields exerted some fresh selling around the US Dollar.
However, the selling pressure around global equity markets now seems to have receded, at least for the time being and was seen weighing on the Japanese Yen's safe-haven appeal, which eventually helped the pair to hold above comfortably above the 112.00 handle through the early North-American session.
Technical outlook
Valeria Bednarik, FXStreet's own American Chief Analyst writes: “The 4 hours chart for the pair shows that it has broken below the 100 and 200 SMA, with the latest offering an immediate resistance in the 112.30 region, as the pair has been unable to advance beyond it since the day started. Technical indicators in the mentioned chart have corrected from extremely oversold levels but quickly resumed their declines, still developing in oversold territory, maintaining the risk skewed to the downside.”
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