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  • USD/JPY lacked any firm directional bias and seesawed between tepid gains/minor losses.
  • The overnight comments from Fed Vice Chair Quarles extended some support to the USD.
  • A softer tone around the US bond yields, equity markets held bulls from placing fresh bets.

The USD/JPY pair held steady near one-week tops, above the 109.00 mark heading into the European session, albeit lacked any firm directional bias.

The pair struggled to capitalize on the previous day’s positive move and witnessed a subdued/range-bound price move through the first half of the trading action on Thursday. The US dollar was supported by the overnight comments from Fed Vice Chair Randal Quarles, saying that the FOMC could begin discussing the plans to adjust the pace of asset purchases if the economic data come in stronger than expected. This, in turn, was seen as a key factor that acted as a tailwind for the USD/JPY pair.

Adding to this, caution ahead of key US economic data on Thursday and Friday helped to put a tentative floor under the greenback. That said, a modest downtick in the US Treasury bond yields held the USD bulls from placing aggressive bets. On the other hand, a softer tone around the US equity futures benefitted the safe-haven Japanese yen and further collaborated to cap gains for the USD/JPY pair, at least for now, warranting some caution before positioning for any further appreciating move.

Market participants now look forward to the US economic docket, featuring the releases of the Prelim (first revision) Q1 GDP, the usual Initial Weekly Jobless Claims, Durable Goods Orders and Pending Home Sales. This, along with the US bond yields, will influence the USD price dynamics and provide some impetus later during the early North American session. Traders might further take cues from the broader market risk sentiment to grab some short-term opportunities around the USD/JPY pair.

Technical levels to watch