On Wednesday 10th of November, the slow descent session of USD/JPY ended with the release of US Consumer Inflation figures for October. The prediction data was a 0.4% increase in the annual CPI rate. However, the data came in double to result in a 0.8% increase, and this high increase has been recorded as the fastest in over 30 years at a 6.2% yearly pace. The reaction on the market was immediate, the US dollar jumped in every major pair. USD/JPY jumped by 20 points and reached the level at 113.49 in the first 15 minutes, then continued the hike for the rest of the day closing in New York at 113.89.  the US currency climbed sharply against the euro finishing the day below 1.1500 ever since July 27. In addition, the sterling has lost a figure and half and attained the level at 1.3408, USD/CAD increased and traded above 1.2580 level for the first time in a month closing at 1.2589.

Tokyo’s policy response to this data will be different. The BoJ has spent more than a decade trying to secure deflationary impulses. Last week Japanese statistics featured the national CPI for October. The data posted was below the expectation by 0.2%, core prices were unchanged at 0.1% while their prediction was 0.3%. But all eyes will be on US Retail Sales for October on Tuesday, the estimation statistic is 0.7%. If the result was below the expectation along with the weakness in November Consumer sentiment, an urgency to the Fed’s inflation fights and support US yields will occur.

From a technical point of view, by the middle of Friday’s trading hour this pair had traded between the support of the 113.74 -113.81 zone and the resistance was at 114.00. If the USD/JPY declines below the support zone, a bearish trend would immediately encounter a strong support zone and lead this pair to trade at 113.00, but this pair needs to break below 113.65 at first. Meanwhile a break above 114.00 would most likely result in a test of a resistance zone at 114.22-114.32.


With the start of a new trading week this pair have struggled to find acceptance above the 1.2600 level. According to last week’s data the US dollar witnessed a profit-taking and applied pressure on the major and attained the highest level since July 2020. Within the beginning of Asian and European trading hours this pair depressed below mid-1.2500’s. This downside was a response of Fed enforcement to adopt more aggressive policy responding to a high inflation. The increased pressure on the President of United States Joe Bidden to release supplies from the SPR have weighed on crude oil prices, which will undermine the demand for the commodity which is linked to loonie price. Market participants now look forward to the Empire State Manufacturing Index along with the oil prices dynamics to grab some short-term opportunity around this major.

From a technical outlook, any further decline below the key 1.2500 psychological level could be seen as a buying opportunity in order not to break below 1.2475. a break below 1.2475 will initiate a bearish movement. However, if this pair successfully breaks above the resistance level near 1.2570 region, this pair could make a fresh attempt to conquer the 1.2600 mark. A break above 1.2600 mark will accelerate the bullish momentum towards 1.2665 area at first then towards the 1.2700 figure.

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