USD/JPY is traded at 113.48. At the time of writing, it was below yesterday's high of 113.78. The pair reached a dynamic resistance and now it could slip lower. A temporary decline is natural after failing to take out the immediate upside obstacle.
Also, a minor retreat was natural as the Dollar Index and the JP225 (Nikkei) slipped lower. USD/JPY could develop a strong correction only if DXY and JP225 will register a larger drop. Technically, a short-term correction could bring fresh long opportunities.
Fundamentally, the Japanese Core Machinery Orders dropped unexpectedly by 2.4% while specialists have expected a 1.6% growth. In addition, the M2 Money Stock rose by 4.2% versus the forecast of 4.4% growth.
The US inflation data could be decisive today. The CPI could register a 0.3% growth while the Core CPI is expected to increase by 0.2%.
USD/JPY Exhausted Buyers
Technically, USD/JPY registered strong growth, so a temporary decline is normal and expected. It has registered only a false breakout through the up channel's upside line. The weekly R2 (113.19) is seen as static support. It could climb higher as long as it stays above this level. A minor retreat towards the R2 or a sideways movement could bring new bullish signals.
The uptrend line, the channel's downside line is seen as a critical support line. Only a valid breakdown from this pattern could invalidate an upside continuation.
USD/JPY Outlook
A minor consolidation above the R2 (113.19) or false breakdowns below this level could signal that USD/JPY could jump higher towards the 114.00 psychological level.
