USD/JPY challenges 200-DMA important support on disappointing US data

The USD/JPY pair extended its reversal move from daily peak and has now dropped to fresh multi-month lows post US economic data.

Currently trading around 108.65 region, the pair ran through some fresh offers on disappointing retail sales and CPI figures from the US. According to the data released just a while ago, the headline inflation, as measured by CPI eased by 0.3% on a monthly basis, with the yearly rate dropping to 2.4% in March from previous month's 2.7%. Also the core CPI, excluding food and energy, unexpectedly eased by 0.1% m-o-m and 2.2% on yearly basis. 

   •  US: CPI falls 0.3% in March; index excluding food and energy falls 0.1%

Adding to the disappointment from inflation figures, monthly retail sales also recorded a larger than expected decline of 0.2% m-o-m, while excluding automobile sales, core sales, were flat as compared to previous month.

   •  US: March advance monthly retail sales were $470.8 billion, 0.2% lower from February

Against the backdrop of rising geopolitical tensions, dismal US macro data, especially easing inflationary pressure, further collaborated towards the prevalent weaker sentiment surronding the major and dragged it to the lowest level since Nov. 17.

Technical levels to watch

A follow through selling pressure below 108.65-60 region (200-day SMA), the pair is likely to accelerate the slide towards 108.35 level before eventually heading towards the 108.00 handle. On the upside, any recovery attempts might now confront immediate strong resistance near 109.00 mark, above which a bout of short-covering might lift the pair beyond 109.40 level (yesterday's high) towards tesitng its next hurdle near the 109.85 region.