USD/JPY drops below 109 handle ahead of FOMC
Following the disappointing macro data from the United States, the USD/JPY pair lost more than 100 pips, falling to its lowest level since April 21 at 108.94. As of writing, the pair is trading at 108.97, losing 1.09 % on the day.
After the data showed that the consumer inflation in the U.S. fell to 1.9% on a yearly basis in May and the retail sales contracted 0.3% on a monthly basis, the greenback was sold aggressively, pushing the US Dollar Index to a fresh eight-month low at 96.31. At the moment, the index is recovering some of its losses as investors cash in their profits ahead of the important FOMC meeting, and is at 96.45, down 0.53% on the day.
- US: Consumer Price Index for all urban consumers decreased 0.1% in May
- US: Advance estimates of retail and food services sales for May 2017 were $473.8 billion
On the other hand, after a mildly positive start to the day, the major equity indexes in the U.S. fell back into the red, suggesting that the risk appetite is fading away. As of writing, the Dow Jones Industrial Average is losing 5 points while the S&P 500 Index is down 0.1%.
- FOMC: Time for 25bps hike - Westpac
- Fed: 25bps hike is in the pipe - Natixis
Technical outlook
108.40 (Apr. 19 low) could be seen as the first technical support ahead of 108 (psychological level) and 107.75 (Nov. 15 2016 low). On the upside, resistances could be encountered at 109.50 (Fib. 78.6% retracement of mid-April - mid-May rise) ahead of 110 (psychological level) and 110.60 (20-DMA).