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USD/JPY struggles at 114.00 as the New York session ends

  • USD/JPY reached two-week tops around 114.00 retreating the upward move as the New York session began.
  • The USD/JPY pair fell amid US dollar weakness across the board.
  • Flat US bond yields undermined the US dollar prospects against the Japanese yen.

The USD/JPY retreated from weekly tops around 114.00, fell 0.17%, trading at 113.88 as the New York session finished. On Friday, the Japanese yen recovered some ground against the greenback, after losing in two days 1.24%, on the back of higher US consumer inflation figures, last seen in the 1990s. Furthermore, the US 10-year Treasury yield, which strongly correlates with the USD/JPY pair, ended flat in the session at 1.565%.

During the Asian session, the pair topped around 114.29, in tandem with US T-bond yields, but as European traders got to their desks, the USD/JPY dipped to 113.95. It seems that the move was triggered by USD bulls taking profits as investors head into the weekend.

In the meantime, the US Dollar Index, which tracks the greenback's performance against a basket of its peer, finished in the red, slid 0.05%, down to 95.096.

US consumer inflation reaches 6.2%, the highest in three decades

Doing a recap of the week, on Tuesday, the so-called wholesale prices with the Producer Price Index for October, excluding volatile items like energy and food, increased by 6.8%, in line with expectations. However, on Wednesday, the Consumer Price Index for the same period, which investors see as the most critical inflation gauge, rose by 6.2%, much higher than the 5.8% estimated by analysts, crushing the previous month's reading. It is worth noting that it is the highest level reached in 30-years, triggering an immediate reaction in the market.

Therefore, that would put the Federal Reserve under pressure. Their view of "transitory" inflation is not applicable, as it seems that elevated prices would last longer than policymakers expected. It is worth noting that the US central bank announced at its last monetary policy meeting that they would begin the bond tapering In mid-November.

Also, on Friday, the University of Michigan Consumer Sentiment Index for November edged lower to 66.8, lower than the 71.7 in October, marking the lowest reading since November 2011.

According to the report, "consumer sentiment fell in early November to its lowest level in a decade due to an escalating inflation rate and the growing belief among consumers that no effective policies have yet been developed to reduce the damage from surging inflation," said Richard Curtin, Surveys of Consumers chief economist.

USD/JPY TECHNICAL SUPPORT/RESISTANCE LEVELS

Overview
Today last price113.88
Today Daily Change-0.19
Today Daily Change %-0.17
Today daily open114.07
 
Trends
Daily SMA20113.86
Daily SMA50112.07
Daily SMA100111.08
Daily SMA200109.83
 
Levels
Previous Daily High114.16
Previous Daily Low113.81
Previous Weekly High114.44
Previous Weekly Low113.3
Previous Monthly High114.7
Previous Monthly Low110.82
Daily Fibonacci 38.2%114.02
Daily Fibonacci 61.8%113.94
Daily Pivot Point S1113.87
Daily Pivot Point S2113.66
Daily Pivot Point S3113.52
Daily Pivot Point R1114.22
Daily Pivot Point R2114.36
Daily Pivot Point R3114.57

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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