USDJPY Drop Deepens The holiday season is fast approaching but markets are showing little sign of slowing down. It’s been another busy week across the board with plenty of big moves and key developments to keep an eye on. However, chatting with traders ahead of the weekend, the move capturing the most attention appears to be the pullback in the Dollar, specifically USDJPY which has fallen more than 4% this week and is now down over 11% from the highs of the year printed in October. So, let’s take a look at what caused the move and, as ever, if you caught it? Well done! If you missed it? There’s always next week.What Caused the Move?Dovish Fed ExpectationsThe main driver causing the USD decline to accelerate this week was the Brooking Institute speech from Fed chairman Powell on Wednesday. USD has been in decline over the last month or so as traders began to price in a shift in Fed strategy. These sales were exacerbated following a much weaker-than-forecast October CPI reading which was seen as confirmation that an inflation top was in and the Fed would therefore soon be adopting a slower pace of hikes with December an increasing favourite for a slowing down date. Powell Points to December Slow Down This week, Fed’s Powell essentially confirmed this view, telling markets that the Fed agreed a slower pace of hikes would be appropriate, from potentially as early as December. This line from Powell saw USD unwinding heavily. On Thursday, the sell-off received further fuel as the latest core PCE reading, a key inflation gauge used by the Fed, was seen coming in below forecasts.PCE data Cools On the back of Powell’s comments and subsequent PCE data, market pricing for a smaller hike in December has jumped aggressively, now back at 80%. The sell-off in USD has driven demand for JPY which has also benefited across the week from safe-haven flows. With equities markets seeing mixed performances this week linked to growing uncertainty around events in China as well as fresh fears over European energy stores in the face of increasingly cold weather in Europe, JPY has been back in demand. This dynamic looks set to continue near-term unless we see something to sharply shift the narrative.US Labour Data Up Next Looking ahead then, today’s US labour data will obviously be key. However, on the back of Powell’s comments and with the broader focus on inflation, the data will likely lose a little sting. It would certainly take a stark upside surprise to rock the market’s view on December and with November CPI due a day before the meeting, that will probably be the main focus for traders.Technical ViewsUSDJPYThe sell-off in USDJPY from YTD highs has seen the market breaking down below the bull channel and below the 139.33 level support. Momentum studies are bearish here and with price now fast approaching a test of deeper support at the 131.36 area, the focus remains on further downside near term. Retail sentiment remains heavily long, adding further support for the sell off.