The currency pair dropped significantly and reached new lows today. The Yen has taken full control and is driving the rate down even if the Nikkei stock index rallied and jumped much above the 21200 psychological level. The Yen is not impressed by the JP225 increase and has increased versus all its rivals on the short term, remains to see what will happen when the index will really decrease because is somehow expected to drop a little after the impressive rally.

The Yen received support from the Japanese M2 Money Stock, which increased by 4.1%, more versus the 4.0% estimate. The greenback drops versus all its rivals as the United States data have disappointed in the afternoon.

The CPI increased only by 0.5% in September, less versus the 0.6% estimate, while the Core CPI surged by 0.1%, less versus the 0.2% estimate and versus the 0.2% growth in the former reading period. Moreover, the Retail Sales have increased only by 1.6%  in September, less compared to the 1.7% estimate. The USD received support only from the Core Retail Sales which has increased by 1.0% beating the 0.9% estimate and from the Prelim UoM Consumer Sentiment.

The currency pair has dropped significantly and is very close to hit the 38.2% retracement level, where he may find temporary support.  A breakdown below the mentioned static support will send the rate towards the 250% Fibonacci line (ascending dotted line). I’ve said in the previous reports that will take out the mentioned support if will reach it.We’ll see what will happen because the USDX is still somehow expected to increase again after the minor retreat.

Technically, the USDX could develop an Inverse Head and Shoulders pattern as long as will stay above the 92.49 static support. Only a minor consolidation above the 38.2% retracement level will confirm an increase in the upcoming period, the ext upside target remains at the 23.5% retracement level, we have some important confluence areas that could attract the price in the upcoming period.