• The USD/JPY plunged towards, down by 0.95%.
• The pair is battling to hold the 20-day SMA, critical support since late July.
• After the CPI’s volatility, markets focus to the Japanese Q3 GDP figures, US PPI and Retail Sales data on Wednesday.  

The USD/JPY suffered significant setbacks in Tuesday's session, falling towards the trajectory of the pair being set by soft CPI data from the US. Now, the focus shifts to high-tier data from both countries to be released on Wednesday.

In October, consumer price inflation in the United States was lower than expected, as indicated by the flat monthly headline Consumer Price Index (CPI). Additionally, prices in the core segment also demonstrated weaker growth than anticipated, registering a 0.2% increase MoM while the YoY measure decelerated to 4%. What weakened the USD was markets betting on a less aggressive Federal Reserve and the hopes on a sooner rate cuts, which fueled a wave of risk-on flows.

On the other hand, preliminary Gross Domestic Product (GDP) figures from Japan will likely impact the dynamics of the pair as it could fuel hawkish bets on the Bank of Japan (BoJ). It's worth noticing that former Bank of Japan BoJ official Hideo Hayakawa will likely raise rates by April 2024, so in case the economy shows strong figures, the JPY may strengthen. That being said, markets are forecasting a 0.6% annualised contraction from its previous 4.8% reading