FxWirePro: USD/JPY trades below 139 handle, further weakness on cards

Chart - Courtesy Trading View 

USD/JPY was trading 0.08% lower on the day at 138.51 at around 04:40 GMT. The pair is grinding lower for the fourth consecutive session, outlook is bearish.

Tokyo core CPI inflation rose more than expected to a 40-year high in November, data showed on Friday.

The Tokyo core consumer price index (CPI) rose 3.6% in November, higher than expectations for a rise of 3.5% and last month’s 3.4%. 

Overall Tokyo CPI inflation rose 3.8% in November, up from last month's 3.5% and also at its fastest pace in 40 years. 

Rising price pressures have dented consumer confidence and spending, a key driver of the Japanese economy.

The Japanese economy unexpectedly shrank in the third quarter, and faces an extended downturn due to pressure from high prices.

The Bank of Japan however, has so far shown no indication to hike interest rates from ultra-low levels. 

Technical Analysis:

- Price action is extending break below 110-EMA and daily cloud

- GMMA indicator shows minor trend is bearish, while major trend is turning bearish

- Momentum is bearish, volatility is high and rising

- MACD and ADX support downside in the pair

Major Support Levels: 135.31 (Lower BB), 133.93 (200-DMA)

Major Resistance Levels: 140.08 (110-EMA), 142.09 (21-EMA)

Summary: USD/JPY trades with a bearish bias. Scope for further downside. Bearish invalidation only above cloud.