USD/JPY: investors move into the yen in droves after US CPI beat

  • USD/JPY: rallies are a fade.
  • USD/JPY lowest since 2016 Nov.

USD/JPY traders were fading the rallies today in a volatile market space where observers were attentive to the implications of the higher than forecasted CPI data. Currently, USD/JPY is trading at 106.98, down -0.76% on the day, having posted a daily high at 107.91 and low at 106.72, (lowest since Nov 2016).

US stocks turn-around in fickle post CPI data market place

Investors were moving to the yen in droves from the off as the stocks turned south on the CPI release in early dors NY trade. There was a sharp bout of supply to 106.99 and then the recovery was faded hard to 106.72 before the correction back onto the 107 handle was rejected once again by the bears who are wrestling over the try line where the pair currently oscillate at 107.00 the figure. 

USD CPI confirms testing of support in bonds

US CPI came in above expectations at 0.5% m/m, with core inflation at 0.35% (3m ann. 2.9% - 6-yr high). Analysts at ANZ explained that the data appears to confirm this trend and gives a green light to test support on bonds. The sell-off in the greenback that was chasing the drop in the VIX below 20 left the DXY down over -0.60% within a day's range of 89.057 - 90.124 while the 10-year note yield moved with a range of between 2.8059% - 2.9095% after opening at 2.8312%.

US 10-year treasury bond yields reach new 4-year highs at 2.91% amid higher US inflation

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that there is a bearish bias in the 4 hours chart: "The pair is further below its 100 and 200 SMAs, both accelerating their declines, while technical indicators consolidate near oversold readings, with no clear directional strength. Renewed selling pressure below 106.80 should open doors for a steeper decline toward the 106.00 region during the upcoming sessions."

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