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Greenback Resumes Downtrend Post CPI, JPY Surges

FOREX
  • US inflation data came alongside expectations and despite a predictably volatile trading session the USD index is ending with 0.85% losses for the day as the confirmation of disinflation on the month has given USD bears the green light to resume selling pressure.
  • Gains across the rest of G10 have been broad based but the focus has been on the significant strength for the Japanese Yen. Hawkish rhetoric had prompted a substantial move lower for USDJPY (-2.40%) before the US data release, however, the pair then resumed its sharp downward trajectory, breaking multiple support levels through Thursday’s trading session.
    • Price has now traded through the bear trigger at 129.52 and printed a fresh low of 128.87 in late US hours. Markets will be paying close attention for a daily close below the bear trigger to confirm a possible head and shoulders pattern drawn from early June 2022.
    • Additionally, moving average patterns could add further weight, with the 50- and 200-dmas on the cusp of forming a bearish death cross. Support seen scant until 128.44, the 1.236 proj of the Oct 31 - Nov 15 - 21 price swing.
  • Elsewhere, both EUR and AUD are showing gains of around 1%, with the single currency continuing to trade in buoyant fashion, extending trend highs above key short-term resistance and the 1.08 mark in tandem. The break higher reinforces the bull trend condition and next targets 1.0913, the 2.764 projection of the Sep 28 - Oct 4 - Oct 13 price swing.
  • A much quieter docket on Friday with UK growth data, Eurozone IP and US Uni of Michigan sentiment figures the main highlights approaching the week’s close.
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