- Dip below the key falling trendline was short-lived.
- US CPI eyed.
The Japanese Yen picked up a bid in early Asia, tracking the somber mood in the US and Asian equities.
Consequently, the USD/JPY dipped to 106.25 earlier today. However, the decline below the key descending trendline (drawn from the Jan. 8 high and the Feb. 2 high) support was short-lived. As of writing, the spot is trading 0.10 percent higher on the day at 106.51.
Focus on US CPI
The market is looking for core CPI to ease to 0.2% m/m in February from 0.3% in January, and to remain at +1.8% on a y/y basis. An above-forecast reading will likely push the yields higher and the risk assets lower. So, the USD/JPY may catch a bid, but gains could be limited/short-lived.
Meanwhile, a weaker-than-expected reading may weigh over the US dollar, but will likely boost risk assets. Thus, the dip in the USD/JPY could be transient.
USD/JPY Technical Levels
A close above 107.05 (March 9 high) would add credence to the upside break of the descending trendline and would allow a stronger rally to 107.91 (Feb. 21 high) and 108.28 (Jan. 26 low). On the other hand, a break below 106.25 (session low) could yield a sell-off to 105.55 (Feb. 16 low) and 105.25 (March 2 low).