The USD/JPY pair came under a modest selling pressure in the late NA session and dropped to a fresh daily low at 110.06. As of writing, the pair was trading at 110.27, losing 0.2% on the day.
Although there were no clear catalysts behind that recent drop, it seems to be a product of a recent greenback sell-off. The US Dollar Index, which reversed course after spiking to a 10-day high at 92.66, tested the 92 mark in the last hour after U.S. Treasury Secretary Steven Mnuchin's remarks during an interview with Fox News dented the demand for the buck. As of writing, the index was at 92.04, dropping 0.4% on the day. Moreover, major equity indexes in the U.S. struggled to gain traction, providing an additional lift to the JPY.
Mnuchin said that Trump Administration was concerned about economic growth and less concerned about the inflation at the moment, suggesting that they were not in favor of making another 25 bps rate hike this year.
Nevertheless, the CME Group FedWatch's rate hike probability rose above the 50% threshold for the first time since July on Thursday after the data from the U.S. showed that consumer inflation, led by an increase in the cost of gasoline and rental accommodation, rose 0.4% on a monthly basis in August after edging up 0.1% in July.
- US: CPI for all items rises 0.4% in August as shelter and gasoline indexes increase
- CME Group FedWatch's Dec hike probability rose above 50% on CPI
Technical outlook
Valeria Bednarik, Chief Analyst at FXStreet, wrotes, "from a technical point of view, the pair seems poised to correct lower, although the overall bullish stance prevails, as in the 4 hours chart, the price is well above its 100 and 200 SMAs, which slowly gain upward strength, while the Momentum indicator retreats strongly within positive territory, as the RSI pulls down from overbought readings."
According to the analyst, supports for the pair could be seen at 110.25, 109.70 and 109.35 while resistances align at 111.05, 111.50 and 111.90.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD remained bid above 0.6500
AUD/USD extended further its bullish performance, advancing for the fourth session in a row on Thursday, although a sustainable breakout of the key 200-day SMA at 0.6526 still remain elusive.
EUR/USD faces a minor resistance near at 1.0750
EUR/USD quickly left behind Wednesday’s small downtick and resumed its uptrend north of 1.0700 the figure, always on the back of the persistent sell-off in the US Dollar ahead of key PCE data on Friday.
Gold holds around $2,330 after dismal US data
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
Bitcoin price continues to get rejected from $65K resistance as SEC delays decision on spot BTC ETF options
Bitcoin (BTC) price has markets in disarray, provoking a broader market crash as it slumped to the $62,000 range on Thursday. Meanwhile, reverberations from spot BTC exchange-traded funds (ETFs) continue to influence the market.
US economy: slower growth with stronger inflation
The dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.