USD/JPY pulls back from highs after US data

USD/JPY pulled back slightly from recent 10-month highs following the latest string of US data.

USD/JPY slid back below the 118.00 mark, although the downside remained contained by the 117.65 area. At time of writing, the pair is trading at 117.75, still up 0.63% on the day, after climbing over 350 pips on the back of Fed’s decision the previous day.

Data showed US consumer price index and core prices, both increased 0.2% in November matching expectations. Year-on-year prices rose 1.7% and 2.1% respectively. Meanwhile, US jobless claims fell to 254,000 in the week ended Dec 10, marking the 93rd week below 300,000.

On Wednesday, the Federal Reserve decided to raise the target range for the federal funds rate to 0.5-0.75%. While the move was highly anticipated, the dollar strengthened as the dot plot showed most members expect three hikes throughout 2017 versus two hikes seen in September’s meeting.

USD/JPY levels to watch

As for technical levels, next resistances could be found at 118.65 (Dec 15 high), 119.00 (psychological level) and not much till 120.00/03 (psychological level/Feb 3 high). On the other hand, supports are seen at 117.00/116.99 (psychological level/Dec 15 low), 116.11 (Dec 12 high) and 114.76 (Dec 14 low).