USD/JPY tests 150.00 mark after Tokyo inflation speeds up

The Japanese yen is the lead gainer on the day, helped by stronger Tokyo inflation data earlier here. The higher price figures owe to the ending of government energy subsidies though, so there’s that to consider. Nonetheless, it still spooked traders into pricing in higher odds of the BOJ hiking rates in December. That sent USD/JPY down to test the 150.00 mark, where it is seen thereabouts now.

The pair is dragged down to also test its 61.8 Fib retracement level at 150.18 with the 150.00 mark also in play. Further below, there is added support from the 100-day moving average (red line) at 149.11. Those are the key technical levels in play at the moment, in terms of downside levels.

On the month itself, the pair is now seen down a little over 1% as it snaps the rebound from October. The dollar itself is also arguably plagued by some month-end shenanigans this week. But looking to December, central bank decisions will be the key focus.

The Fed and BOJ may both end up being more hawkish than as currently anticipated. So, there are potential upside risks to both the dollar and the yen. However, given the circumstances, the BOJ definitely has more propensity to surprise. That said, it could go either way for them.

For now though, traders will look to be more wary. But as the chart shows, sellers are favoured at the moment but are facing up against a couple of key technical points on the week. Looking to the month ahead, the first key risk event will be the US jobs report next week. So, mark that down in your calendars.

This article was written by Justin Low at www.forexlive.com.