USD/JPY bears are moving in again ahead off the Fed

• USD/JPY remains under pressure on the front side of the trendline resistance.
• US Dollar consolidates the US CPI data losses ahead of the Fed. 

USD/JPY fell to a one-week low of 134.65 and is currently down 0.1% in Asia as it consolidates the losses made following the US Consumer Price Index that showed that inflation rose less than expected last month. Traders now exp[etc that the Federal Reserve will slow the pace of rate increases after its two-day meeting on Wednesday.

US CPI drops below the mark

• US CPI MoM Nov: 0.1% (est 0.3%, prev 0.4%).
• US CPI Ex Food And Energy MoM Nov: 0.2% (est 0.3%, prev 0.3%).
• US CPI YoY Nov: 7.1% (est 7.3%, prev 7.7%).
• US CPI Ex Food And Energy YoY Nov: 6.0% (est 6.1%, prev 6.3%).

The Consumer Price Index sent risk assets on a tear with the NASDAQ initially jumping over 400 points. However, US stocks soon were met with supply as traders took profits ahead of the Fed. DXY, an index that measures the greenback vs. a basket of currencies, including the Yen, was down some 0.9% towards the close on Wall Street at 104.03 but off the lows of the day of 103.586. 

Domestically, the Bank of Japan released its closely watched quarterly tankan survey of corporate activity in Japan:

''Business confidence among big Japanese manufacturers worsened in the three months to December for a fourth straight quarter, the Bank of Japan's closely watched tankan survey showed, amid rising costs of living and a slowdown in the global economy,'' Reuters reported. 

''The headline index for big manufacturers' sentiment was plus 7 in December, the survey showed on Wednesday, compared with plus 8 in September and plus 6 expected in a Reuters poll. It was expected to deteriorate further to plus 6 in March.

The survey also showed big firms plan to raise their capital spending by 19.2% in the financial year to March, versus an increase of 20.9% expected by economists and a 21.5% gain seen in the previous survey, the tankan showed.''

Analysts at Rabobank explained that ''the forthcoming spring wage talks will draw strong market interest and could determine the outlook for BoJ policy for next year and beyond.  That said, given its long history battled the psychologies associated with deflation it is likely that the BoJ will retain a very cautious approach to policy. ''

USD/JPY technical analysis

USD/JPY is eying up the 130.00 area that could be tested in the coming days or weeks if the bears stay the course.

Eyes now turn to the Fed and on a dovish outcome, the level could be reached before the close of the week. It has not been uncommon for the yen to fly 500 pips in a week: