USDJPY sinks after US CPI numbers, drops more than 250 pips

• US Dollar collapses following the October US CPI reading.
• USDJPY falls to the lowest in more than a month.
• Greenback seems vulnerable to more losses.

The USDJPY lost almost 300 pips in a few minutes following the release of US inflation data. The pair dropped from above 146.00 to as low as 143.14, reaching the lowest level since September 23.

The US Consumer Price Index annual rate dropped from 8.2% to 7.7% in October, below the 8.0% of market consensus and hitting the lowest since January. Also core reading showed lower-than-expected numbers.

The inflation reading sent US bond yields sharply lower. The US 10-year dropped to 3.90% from 4.10%, while the 2-year fell from 4.60% to 4.38%. Equity prices in Wall Street jumped. The yen jumped versus the dollar and remained steady against other currencies, not affected by risk appetite and supported by the decline in US yields. Despite showing already massive losses, the Dollar still looks vulnerable.

The USDJPY broke the key support area of 145.00. While below, the bias should point to the downside. The next strong support is seen around 141.50, with an intermediate area at 142.60.

Technical levels