- USD/JPY pair clocked a 9-day high of 111.39 a few minutes ago.
- Better-than-expected Japanese CPI reading has so far failed to put a bid under the JPY.
- 10-year US-Japan yield spread remains biased toward USD/JPY bears.
The USD/JPY pair rose to 111.39 in Asia – the highest level since Aug. 15 – having found acceptance above the key 50-day moving average (MA) hurdle yesterday.
Japan’s inflation, as represented by the consumer price index (CPI), rose 0.9 percent year-on-year, beating the forecast of 0.4 percent growth by a big margin.
However, core consumer price index, which includes oil products but excludes fresh food prices, printed at 0.8 percent, narrowly missing the estimate of 0.9 percent. Further, consumer prices ex-food and energy, rose 0.3 percent as expected.
A better-than-expected headline figure is not helping the JPY gain ground.
It is worth noting that the three-day rally isn’t backed by the rising yield spread. In fact, the 10-year US-Japan yield spread is holding 272 basis points – the lowest level since the end of March – having witnessed an inverse head-and-shoulders breakdown earlier this month.
USD/JPY Technical Levels
Resistance: 111.43 (Aug. 15 high), 112.00 (psychological hurdle), 112.15 (Aug. 1 high)
Support: 111.24 (session low), 111.04 (50-day MA), 110.72 (5-day MA)
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