The greenback was momentarily jolted today following the release of the latest Consumer Price Index (CPI) numbers for August. Nevertheless, the greenback is currently in the process of resurgence. Read more about it from our latest comprehensive analysis of the EURUSD.
The highly anticipated August CPI report of the Bureau of Labour Statistics (BLS) revealed that U.S. inflation grew at a slower pace last month than initially forecasted. This caused heightened fluctuations in the price of the USDJPY.
As can be seen on the 2H chart above, the report catalysed an attempted breakdown below the 38.2 per cent Fibonacci retracement level at 110.013. Meanwhile, the price action remains concentrated within the boundaries of a broader range, spanning between the 61.8 per cent Fibonacci at 109.522 and the 23.6 per cent Fibonacci at 110.317.
The latest upswing commenced following a sizable rebound from the lower limit of the range. Despite the sudden upsurge in bearish pressure, however, the price action would have a tough time ahead in breaking any lower.
That is so because the Ascending Order of the three moving averages - the 100-day MA (in blue), the 200-day MA (in orange) and the 300-day MA (in purple) - can be found just below the 38.2 per cent Fibonacci. This makes the latter a significant support level.
The upper boundary of the range remains the primary target for the current upswing; however, if the price action does manage to close down below the 38.2 per cent Fibonacci and the three MAs, then the reversal could be followed by a subsequent dropdown to the lower limit of the range.
Headline inflation grew by 0.3 per cent in August, missing the preliminary forecasts, which were anticipating a 0.4 per cent growth. This performance also marks a 0.2 per cent contraction in inflationary pressures from a month prior.