Search ForexCrunch
  • USD/JPY traders look for strong signals to break the chain of three-day declines.
  • Tokyo CPI slipped below -0.6% forecast, core CPI matched -0.7% expected in November.
  • Risks struggle amid US off, mixed news on vaccine, US-China front.
  • A light calendar can extend the sideways moves.

USD/JPY takes rounds to 104.25 during Friday’s Asian session. The yen pair recently shrugged off Tokyo Consumer Price Index (CPI) details while extending the previous day’s sideways moves, mainly due to the US Thanksgiving Day holiday. However, challenges to the previous risk-on mood can keep the quote heavy despite a likely easy day.

Tokyo CPI drops to -0.7% YoY, more than -0.6% market consensus. Further details suggest the CPI ex Fresh Food, known as Core CPI, match 0.7% forecast on YoY. Also, an additional funneled down the reading of the CPI that sheds Fresh Food and Energy prices, declined below -0.1% to -0.20% YoY.

Although all the major inflation signals marked dovish prints, USD/JPY failed to react as traders await fresh, stronger, clues to break the previous day’s monotony.

In doing so, the latest coronavirus (COVID-19) vaccine clues can play their role. US President Donald Trump recently said that the vaccine will be delivered starting next week while AstraZeneca announced another trial before going ahead with its vaccine.

Elsewhere, the US-China tussle hovers around the inability to deliver trade deal promises and Beijing’s alleged linkages with the Iran missile program, not to forget China’s dislike for the American intervention in the matters relating to Taiwan and Hong Kong. Furthermore, Iran-Saudi Arabia and the sustained increase in the US covid cases are additional challenges to the risk-tone sentiment.

Even so, S&P 500 Futures flash mildly positive signs amid vaccine hopes while stocks in Asia-Pacific also follow the suit by press time.

Moving on, a lack of major data/events can bore the traders for the rest of Friday but risk catalysts and broad US dollar weakness may keep the bears hopeful.

Technical analysis

A confluence of 21-day SMA and three-week-old symmetrical triangle, currently around 104.45, restricts the pair’s upside moves. Until then, a gradual downward trajectory towards 103.85 can’t be ruled out.