“¢ Resurgent US bond yields remain supportive of the positive move.
“¢ Today’s mostly in-line US PPI figures did little to influence the USD.
“¢ Risk-off mood underpins JPY and further collaborates towards capping.
The USD/JPY pair held on to its daily gains near session tops, comfortably above the 113.00 handle, albeit had a rather muted reaction to the US PPI figures.
With investors looking past the US President Donald Trump’s latest criticism over the pace of Fed rate hikes, a goodish pickup in the US Treasury bond yields helped the pair to defend the 112.85-80 support area and snap four consecutive days of losing streak.
The positive momentum, however, failed to extend following the release of mostly in-line US PPI print, coming in to show a 0.2% m/m rise in wholesale prices. A slightly weaker y/y increase, at 2.6% as against 2.8% anticipated seems to be the only factor keeping a lid on the major.
Adding to this, the prevalent risk-off mood, as depicted by a sea of red across European equity markets and indications of a weaker opening for the US bourses, underpinned the Japanese Yen’s safe-haven status and further collaborated towards capping gains, at least for the time being.
Hence, it would be prudent to wait for a follow-through buying interest beyond overnight swing high resistance near the 113.40 region before traders start positioning for any further near-term up-move.
Technical levels to watch
The 113.55-60 region is likely to act as an immediate strong resistance, above which the pair is likely to aim towards reclaiming the 114.00 round figure mark. On the flip side, weakness back below the 113.00 handle, leading to a subsequent fall below the 112.85-80 support area now seems to accelerate the slide further towards mid-112.00s.
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