FxWirePro: USD/JPY extends gradual grind lower, focus on US mid-term elections, inflation

Chart - Courtesy Trading View 

USD/JPY was trading 0.06% lower on the day at 145.59 at around 04:20 GMT, outlook is bearish.

The pair is extending gradual grind lower, edges closer towards daily cloud support.

Downbeat US data joined the risk-on mood to dent the US dollar, dragging the pair lower.

Traders remains cautious ahead of the US Consumer Price Index (CPI) data, which will release on Thursday.

Data will determine whether the Fed will increase the peak for terminal rates or will leave them unchanged.

Preliminary estimates suggest the headline CPI is likely to slip lower to 8.0% vs. the prior release of 8.2%. While the core CPI that excludes oil and food prices is seen lower at 6.5% against 6.6% recorded earlier.

On the other side, reports from Bloomberg show Japan’s Prime Minister Fumio Kishida is set to approve USD198 billion in the additional budget for the economic stimulus plan.

USD/JPY extends weakness for the 4th straight session. Price action trades shy of 55-EMA support. Bears target daily cloud at 142.54.

Major Support Levels: 

S1: 144.44 (55-EMA)

S2: 142.54 (Cloud top)

Major Resistance Levels: 

R1: 146.53 (5-DMA)

R2: 147.80 (20-DMA)

Summary: USD/JPY trades with a bearish bias. The pair is on track to test daily cloud support at 142.54. Retrace above 21-EMA negates any bearishness.