“¢ A modest USD retracement does little to assist build on the overnight uptick.
“¢ Risk-on mood/rising US bond yields helped to limit deeper losses, for now.
The USD/JPY pair struggled to build on the overnight modest uptick and traded with a mild negative bias through the early European session.
The US Dollar slipped lower on Tuesday, giving back some of the previous sessions strong gains, and was seen as one of the key factors exerting some downward pressure on the major. However, a goodish pickup in the US Treasury bond yields, underpinned by expectations for a gradual Fed rate hike path this year, extended some support.
This coupled with a fresh wave of global risk-on trade, as depicted by strong gains across European equity markets, weighed on the Japanese Yen’s safe-haven appeal and might further contribute towards limiting any deeper losses, at least for the time being.
In absence of any major market moving economic releases, the pair seems more likely to continue with its range-bound/subdued price action ahead of expected bilateral trade talks between the US and Japan in Washington on Thursday.
This coupled with this week’s biggest data point, the US consumer inflation figures, due on Friday, should play an important role in determining the pair’s next leg of directional move.
Technical outlook
Omkar Godbole, Analyst and Editor at FXStreet writes: “A close today above 111.53 (previous day’s high) would validate yesterday’s bullish inside-day defense of the ascending trendline and allow a rally to recent highs above 113.00.”
“On the other hand, a close below 111.15 (previous day’s low) would shift risk in favor of a drop to the pre-BOJ low of 110.58,” he added further.
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