USD/JPY plummets to session lows, around 110.70 on dismal US macro data

   “¢   US retail sales plunge 1.2% m/m in December, core sales down 1.8% m/m.
   “¢   US PPI slows more than expected and exerts some fresh pressure on the USD.

The USD/JPY pair finally broke down of its European session consolidation phase and refreshed session lows, around the 110.70 region in reaction to disappointing US macro releases.

The pair met with some fresh supply after data released from the US showed monthly retail sales tumbled 1.2% m/m in December, with the core reading (excluding automobiles) also falling short of market expectations and recording a sharp fall of 1.8% during the reported period.

Adding to the disappointment, the US Producer Price Index (PPI) slowed more than expected to 2.0% y/y rate in January, down from 2.5% in the previous month, and weekly jobless claims unexpectedly jumped to 239K during the week ended February 8.

The softer data exerted some additional downward pressure on the already weaker US Treasury bond yields, which exerted some downward pressure on the US Dollar and was seen as one of the key factors behind the pair’s latest leg of a sharp slide of around 30-pips.  

Technical outlook  

Valeria Bednarik, FXStreet’s own American Chief Analyst writes: “The pair could turn south short-term if its decline extends below the daily low of 110.86, although the bearish case will come back to play only if the slide extends below 110.10. Selling interest will likely reject the first test of the 111.45 area.”