- US inflation slows more than expected in November.
- The Japanese yen soars after the report is released.
- USD/JPY falls below 135.00 and hits 1-week lows.
The pair USD/JPY it plummeted after the release of US inflation data. The pair fell from 137.60 to 134.60reaching the lowest level in a week and approaching the multi-month low of 133.58.
Inflation slows, focus on FOMC meeting
The Consumer Price Index US CPI rose 0.1% in Novemberbelow the 0.3% market consensus. The annual rate fell from 7.7% to 7.1%, reaching the lowest level in almost a year. The inflation figures eased expectations about the Fed’s future rate hike path.
After the figures, the US dollar tumbled across the board and the Japanese yen soared, driven by a recovery in Treasuries. US bond yields plummeted, with the 10-year note falling from 3.60% to 3.43%. The DXY Dollar Index is down 1.15%, trading below 104.00.
On Wednesday, the Federal Reserve will announce its decision on monetary policy. A rate hike of 50 basis points is expected. New macroeconomic forecasts will be published. Powell will give a press conference.
USD/JPY looking for the recent low
The sharp decline in USD/JPY significantly damaged the outlook for the dollar. The price has returned to below the 200-day simple moving average. It is currently testing the 135.00 zone and a break below 134.60 would expose next support around 134.10. Below that, attention would be focused on the monthly minimum of 133.60.
USD/JPY technical levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
