US producer price index data came in largely in line with expectations, and did not change expectations for the Federal Reserve’s monetary policy decision next week, which is focused on cutting interest rates by 25 basis points.
However, the USD/JPY pair has returned to the downside. This bias is contributed by the inability to stay above its 100-hour moving average at 142.58. In the Asian and European sessions, the price moved back above this moving average but was unable to maintain the momentum. The break below this moving average disappointed buyers, leading to a return to the early August low at 141.678, and further lows from early September up to 141.942.
A break below this level would prompt traders to look towards the lows recorded in early January (the first trading day of the year) at 140.807. Yesterday, the price moved to this level – and through it – to reach a new low of the year at 140.702. This level will also be a downside target in the future.
Now a return above the 100-hour moving average at 142.58 is necessary to tilt the bias back to the upside. Sellers remain more in control.