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Despite warm US PPI, Yen remains stronger so far

Market Analysis

USDJPY, H1

The US dollar moved higher after the warmer CPI print, which saw both the headline and ex-food and energy components rise more than forecasts. U.S. PPI rose 0.4% in October for both the headline and core, identical to September’s gains. The data are hotter than expected, though in part still seeing some residual impact from the disasters. Goods prices were up 0.3% last month, with energy costs unchanged while food prices were up 0.5%. Compared to last year, headline PPI is at a 2.8% y/y pace, the fastest since February 2012, versus September’s 2.6% y/y, while the core rate is at 2.4% y/y from 2.2% y/y previously.

The EURUSD dipped under 1.1740 from 1.1750, as USDJPY topped near 113.60 from 113.40. However gains were short-lived, as both pairings subsequently moved back to pre-data levels. USDJPY bottomed much more aggressively than before at 113.45, while a closing today below the 20-Day MA and current resistance at 113.65, could confirm that the pair is still in a downtrend seen since November 6. In addition, the pair has been captured in a Rising wedge since late September. Hence  a break of the wedge below the Daily Support at 113.10,  would suggest bears are in a major control of USDJPY. The Daily RSI is neutral at 54, while Stochastic holds above 30.

Nevertheless, if pair holds today a support at 113.30, then a possible retest of 113.80 could be seen overnight.

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Andria Pichidi

Market Analyst

HotForex

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