FxWirePro: USD/JPY pare some of the US inflation-led slump, finds support at 110-EMA

Chart - Courtesy Trading View 

USD/JPY was trading 0.65% higher on the day at 141.85 at around 04:50 GMT.

The major has found strong support at 110-EMA, pares some of the US inflation-led slump.

USD/JPY saw the biggest slump in 14 years on Thursday after US Inflation surprised markets with a fall in October.

Data released on Thursday showed the US Consumer Price Index (CPI) for October declined to 7.7% YoY, the lowest since last March, versus 8.0% expected and 8.2% prior. 

More importantly, the Core CPI fell to 6.3% compared to 6.5% market forecasts and 6.6% previous readings.

Fall in October inflation numbers have raised the scope for an easy Fed rate hike in December. 

Further, increasing fears of Bank of Japan's (BoJ) intervention in the forex market to defend the Yen and its support of easy money policy keep downside pressure in the pair.

Focus will be on today’s first readings of the US Michigan Consumer Sentiment Index (CSI) for November, expected 59.5 versus 59.9 prior.

Also, Sunday’s meeting between US President Joe Biden and Japan’s Prime Minister (PM) Fumio Kishida will be watched for clear directions.

Major Support Levels: 

S1: 140.17 (110-EMA)

S2: 138.14 (Cloud base)

Major Resistance Levels: 

R1: 143.31 (Cloud top)

R2: 144.25 (55-EMA)

Summary: Technical analysis shows further downside scope in the pair. Price action is currently holding support at 110-EMA. Break below will drag the pair lower.