USD/JPY plummets to 113 post-US CPI data

The USD/JPY, which had been moving in a very tight range near mid-113s since the start of the week, came under a heavy selling pressure following the CPI data from the United States and broke below its consolidation channel to refresh its 6-day low at 112.95. As of writing, the pair was trading at 113, down 0.5% on the day.

According to the data released by the U.S. Bureau of Labor Statistics, the Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4% in November following October's reading 0f 0.1% and came in line with the market consensus. However, the core-CPI, which strips the volatile food and energy prices, rose only 0.1% and 1.7% on a monthly and yearly basis respectively, both data failing to meet the market estimates. The US Dollar Index quickly dropped below the 94 mark on the data and was last seen at 93.86, where it was down 0.2% on the day.

Later in the NA session, the FOMC is going to publish its monetary policy statement and the updated economic projections and the 'dot plot.' "We expect the Summary of Economic Projections to upgrade GDP growth in 2018 and 2019 and to mark down the unemployment path by two-tenths to 3.9%, offset only partly by a one-tenth reduction in the longer-run unemployment rate to 3.5%. We expect the 2018 inflation projections to remain at 1.9%. We continue to expect four rate hikes next year," Goldman Sachs analysts argue.

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Technical levels to consider

The initial hurdle for the pair could be seen at 113.75 (Dec. 12 high) ahead of 114.10 (Nov. 9 high) and 115 (psychological level). On the downside, supports are located at 113.00/112.95 (psychological level/50-DMA/daily low), 112.40 (20-DMA) and 111.70 (200-DMA).