USD/JPY falls more than 250 pips after US CPI
13.12.2022, 15:05

USD/JPY falls more than 250 pips after US CPI

  • US inflation slows more than expected in November.
  • Japanese yen soars across the board following the report.
  • USD/JPY drops below 135.00 to one –week lows.

The USD/JPY collapsed after the release of US inflation data. The pair dropped from 137.60 to as low as 134.60, reaching the lowest level in a week and approaching the multi-month low of 133.58.

Inflation slows down, FOMC meeting

The US Consumer Price Index rose in November by 0.1%, below the 0.3% of market consensus. The annual rate fell from 7.7% to 7.1%, reaching the lowest level in almost a year. Inflation numbers eased expectations about the future path of Fed rate hikes.

Following the numbers the US dollar collapsed across the board and the Japanese Yen soared, boosted by a rally in Treasuries. US bond yields sank with the US 10-year falling from 3.60% to 3.43%. The DXY is falling by 1.15% under 104.00.

On Wednesday, the Federal Reserve will announce its decision on monetary policy. A 50 basis points rate hike is expected. New macroeconomic forecast will be released. Powell will hold a press conference.

USD/JPY looking at the recent low

The sharp decline in USD/JPY damaged significantly the outlook for the Dollar. Price is back under the 200-day Simple Moving Average. Currently is testing the 135.00 area and a break under 134.60 would expose the next support around 134.10. Below attention would turn to the monthly low at 133.60.

Technical levels

 

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