USD/JPY probes resistance at 104.94 as Japan's core CPI drops

• USD/JPY faces rejection at key resistance at 104.94. 
• Japan's core CPI dropped for the second consecutive month in September. 

USD/JPY tested former support-turned-hurdle at 104.94 (Oct. 2 low) a few minutes ago as Japan's consumer prices slipped for the second straight month in September. 

Core consumer prices, which exclude the effect of volatile fresh food and energy component, fell 0.3% year-on-year in September following August's 0.4% decline. The data showed the Japanese economy is facing coronavirus-induced deflationary pressure. 

As such, the Japanese yen came under pressure., pushing USD/JPY higher to 104.94. The resistance, however, has held intact, forcing the currency pair back to 104.80. 

The US 10-year yield clocked a four-month high of 0.87% in early Asia. The hardening of the yield is again failing to put a strong bid under the greenback. Analysts foresee a continued rise in yields on the back of the US fiscal largesse. 

The focus now shifts to the second and final US Presidential debate. "Democrat Presidential candidate Joe Biden is ahead in the polls and does not need an outright victory, but only needs to hold his own in the confrontation," FXStreet's Joseph Trevisani said.

Trevisani added that "unless there is a breakdown by either candidate or a first-order unusual event, markets are unlikely to take much notice, however, heated the rhetoric."

Technical levels