Key Highlights

• The US Dollar recovered from 108.60 against the Japanese Yen, but faces an uphill task near 110.00.
• There is a major resistance zone forming near 109.75 110.00 on the 4 hours chart of USD/JPY.
• Japan’s National Consumer Price Index for July posted a 0.4% rise (YoY), similar to the last +0.4%.
• Tokyo’s Consumer Price Index in August 2017 increased 0.5% (YoY), more than the +0.3% forecast.

USD/JPY Technical Analysis

The US Dollar tested the 108.60 support on a few occasions against the Japanese Yen. The USD/JPY pair formed a decent base and started an upside towards a major hurdle at 110.00.

The pair has recovered above the 38.2% Fib retracement level of the last decline from the 110.94 high to 108.60 low. However, on the upside, there is a major resistance zone forming near 109.75 110.00 on the 4 hours chart of USD/JPY.

There are two bearish trend lines and the 100 simple moving average (H4) positioned near 109.75 110.00. At the moment, the pair is struggling to clear the 50% Fib retracement level of the last decline from the 110.94 high to 108.60 low at 109.77.

Therefore, it won’t be easy for buyers to push the pair above 110.00. There is a chance of a rejection and a downside reaction back towards the 109.20 00 support zone in the near term.

Japan’s National CPI and Tokyo’s CPI

Recently, there were a few important releases in Japan such as the National CPI for July 2017 and Tokyo’s CPI figure for August 2017.

The National Consumer Price Index for July 2017 by the Statistics Bureau was forecasted to increase by 0.4% compared with the same month a year ago. The actual result was as expected, as the CPI in July 2017 rose 0.4%, similar to the last +0.4%.

The National Consumer Price Index Ex Fresh Food was forecasted to increase by 0.3% compared with the same month a year ago. The actual result came in at +0.5%, but more than the last +0.4%.

Tokyo’s Consumer Price Index for August 2017 was forecasted to increase by 0.4% compared with the same month a year ago. The actual result was better than the forecast, as the CPI increased 0.5%, which was also more than the last +0.1%.

Similarly, Tokyo’s Consumer Price Index Ex Fresh Food for August 2017 was forecasted to increase by 0.3% compared with the same month a year ago. The actual result was encouraging, as the CPI increased 0.4%, more than the last +0.2%.

Overall, it seems like the USD/JPY pair might struggle to break the 110.00 resistance zone and likely to trade in a range before the next move.