Risk barometer USD/JPY succumbed to selling pressure as global stocks hit the skids ahead of another crucial test with tomorrow's U.S. CPI.
The fear of rising yields that pummeled equities after today's U.S. PPI report nLLAALEEDH pushed USD/JPY below 21-DMA support as derisking flows benefited the yen.
An unexpectedly strong CPI report could trigger a further rise in Treasury yields that unnerves markets and deepens USD/JPY's correction from its October peaks.
On the other hand, an as-expected or slightly-below-forecast CPI might be the best scenario for stabilizing USD/JPY or reviving its uptrend since March, allowing it to benefit from a bullish seasonal pattern from mid-October to December the past five years .
The recent sell-off has corrected overbought daily RSI readings and seen prices fall from the upper 21-day Bolli, which would help any rebound.
On the current trajectory, however, a close below the 21-DMA and 112.72 Fibo support could put the lower Bolli and 100-DMA near 111.24 in play.
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