USD/JPY continues to remain bearish as all attempts to reverse the price higher have been failing at the 100 SMA (green) in recent weeks. The big level at 130 has been broken and yesterday we saw another failure at the 100 SMA and a reversal lower after the USD Q4 GDP figures.

The Tokyo inflation report from Japan helped push this pair lower, after showing another increase this month. The headline, core, and core-core inflation came above December readings as well as above median consensus expectations.

Tokyo area inflation precedes Japanese nationwide inflation for the month by around three weeks and is sore of a guide. If these results are duplicated at the national level it’ll be another used to argue for BOJ exit. The Bank of Japan has been insisting, that inflation is transitory. Analysts at the Bank expect it to begin to fall from September/October.

Tokyo January Inflation Report

• Tokyo January CPI YoY 4.4% vs 4.0% expected

• December CPI YoY was 4.0%

• Tokyo CPI YoY excluding Fresh Food 4.3% vs 4.2% expected

• December was 4.0% (the fastest pace since May of 1981)

• Tokyo CPI YoY excluding Food, Energy vs 2.9% expected,

• December was 2.7% (this measure of Japanese inflation is closest to the US ‘core’ CPI)

USD/JPY took a hit after that and continued the decline after the reversal at the 50 SMA. On the daily chart the 20 SMA stands where the 50 SMA comes at the H4 chart, pushing the price down. Although this also depends on the USD as well which has endured some heavy losses, so it might be time for a decent pullback up.

USD/JPY Live Chart