• The Dollar weakens as US yields pull back.
• Investors are focusing on US inflation ahead of Wednesday’s Fed decision.
• USD/JPY has been rejected at the 146.85 area.

The US Dollar is going through a significant reversal against the Japanese Yen on Tuesday. Lower US yields and a moderate risk appetite are weighing the USD across the board with all eyes on November’s US inflation reading.

US Treasury yields have resumed their downside trend as the effect of the strong payrolls report seen last Friday faded and the market shifted its focus to the Consumer inflation data and Wednesday’s Fed Decision.

Consumer prices are expected to have grown at a 3.1% early pace in November, down from 3.2% in October. The core inflation, which removes the impact of seasonal products like food and energy, is seen steady at 4%.

USD/JPY has been rejected below 146.85 resistance area

The technical picture is bearish, as the pair failed to breach resistance at 1.4685 where the 50% retracement of the pair’s decline from mid-November high meets trendline resistance at 146.85.

This has left bears in control, with the support level at 145.00 under pressure. Below, 143.85 and 141.75 are the next targets.
 

Technical levels to watch