USD/JPY drops after US data, prints fresh lows under 113.30
10.12.2021, 15:04

USD/JPY drops after US data, prints fresh lows under 113.30

  • US yields drop after US data helping Japanese yen across the board.
  • USD/JPY remains sideways, testing the 113.30 area.

The USD/JPY is falling on Friday after and it is near the daily low located at the 113.30 region. Earlier the pair peaked at 113.79 before turning to the downside amid some dollar weakness following US data.

Yields down, yen up

The Japanese yen gained momentum across the board after the release of US CPI for November. The numbers came most in line with expectations, with the annual rate rising to 6.8%, the highest since 1982. Those numbers trigger a decline in US bond yields. The 10-year fell to 1.47% and the 30-year to 1.85%. Next week is the FOMC meeting.

“The concern at the Fed will be that high inflation today can fuel expectations of higher inflation tomorrow and the day after that and so on. This can then feed through into wage demands, and in an environment of decent corporate pricing power we see those costs post onto customers. The Fed will be keen to avoid this (or be seen willing to tolerate it), hence our expectations for a faster taper next week, with the programme concluding in February. We also expect them to signal the prospect of two rate hikes in their “dot plot”, up from the one they currently have”, commented analysts at ING.

Ahead of the end of the week, USD/JPY is near the 113.30 support area. A break lower could trigger more losses. The next support is seen at 113.05 and then 112.70. On the upside, 113.55 is the immediate resistance followed by the 113.80 zone.

Technical levels

 

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