USD/JPY retreats back below 111.00 handle on dismal US retail sales

The USD/JPY pair trimmed some of its strong gains to 7-week tops and has now retreated back below the 111.00 handle on disappointing US retail sales data.

The spot ran through some fresh offers after the US monthly retail sales unexpectedly contracted by 0.2% in August, while sales excluding automobiles recorded a modest growth of 0.2% during the reported period. The readings were worse than expected and did little to lend any support to the US Dollar

Other US data showed Empire state manufacturing index retreated a bit to 24.4 in September, as compared to previous month's three year high level of 25.2 and was better than consensus estimates pointing to a drop to 19. 

Technical levels to watch

A follow through retracement is likely to find support near 110.65 level, which if broken could accelerate the fall back towards the key 110.00 psychological mark.

Meanwhile, bullish momentum beyond 111.80 immediate resistance is likely to get extended even beyond the 112.00 handle towards the very important 200-day SMA hurdle near the 112.25 region.

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