USD/JPY sits above 109.00 ahead of US retail sales & CPI release

The Dollar-Yen pair trades flat lined around 109.15 levels in Asia amid holiday thinned volumes with a focus on the US retail sales and CPI release.

Treasuries on a biggest losing streak since Jan 2016

Treasury yields are on a biggest losing streak since January 2016, with a 10-year yield hitting a five-month low of 2.218%. The drop in the yields pushed the pair to a low of 108.72 yesterday.

The subsequent recovery to 109.15 largely appears to be a chart driven move.

Peak inflation

The yields could drop further if the US March CPI prints lower than the estimate of 2.6% y/y. Moreover, a drop in inflation would add credence to the argument that inflation may have peaked across the advanced world. The demand for the US dollar could also be influenced by the retail sales release.

USD/JPY Technical Levels

A break above 109.55 (5-DMA) would expose 110.00 (1-hr 100-MA) and 110.37 (1-hr 200-MA). On the other hand, a breach of support at 109.00 (zero figure) could yield a re-test of 108.72 (previous day’s low) and 108.60 (200-DMA).