USDJPY Plunges On Fresh US Inflation Fall

US CPI Falls AgainThe US Dollar has come under heavy selling pressure today on the back of yesterday’s US inflation data. On the yearly figure, CPI was seen cooling to 3% from 4% prior, below the 3% reading the market was looking for. Both monthly readings were also seen coming in below expectations. Having peaked around 11% last year, CPI is now just 1% above the Fed’s 2% target and, as such, traders are eyeing the end of the Fed’s tightening campaign. While the market is still looking for the Fed to hike rates by a further .25% this month, beyond that expectations have now shifted back in favour of a pause and pricing for a rate cut by March 2024 rising to around 30%.USD Repricing UnderwayWith recent jobs data having cooled and inflation now close to target, the Dollar is undergoing a heavy repricing. We recently heard from some Fed officials who shared the view that tightening was almost done, and this is certainly a theme which traders will be monitoring closely at the July FOMC. For now, the near-term USD outlook remains bearish with further losses likely through the end of the week. PPI will be the main data focus today and should keep the deflationary story centre stage.Technical ViewsUSDJPYThe reversal in USDJPY has seen the market falling sharply from around the 145 level highs. Price has broken back under the 142.21 support and is now trading back down at the 138 level. This is a major pivot for the pair and a break lower here will turn focus to the bull channel lows next ahead of deeper support at 132.91.