USD/JPY consolidates the downside around 109.00, US CPI, Powell eyed

• USD/JPY weighed down by trade stalemate, cautious equities.
• Upside to face stiff resistance at 5-DMA of 109.12.
• All eyes on US CPI and Powell’s testimony for a range breakout.

The USD/JPY pair is seen extending its overnight bearish consolidation phase around the 109 handle into Tokyo open, as the sentiment remains undermined by US President Trump’s failure to offer fresh insights into the trade deal signing.

USD/JPY clings to 200-DMA at 109.03 in early Asian trades

The spot trades modestly flat, with the bias leaning to the downside, as the anti-risk Yen keeps the upper edge over the greenback amid a cautious market mood, indicated by the negative start to the Japanese equity markets and losses in the S&P 500 futures.

Despite the downbeat tone, USD/JPY manages to hold the 10-DMA support at 108.84, as the 1% rally in the US Treasury yields across the curve helps keep the buoyant tone intact around the US dollar vs, its main peers. The USD index stalled its upside following Trump’s speech but now remans close to the four-week highs of 98.42.

Further, the bears continue to limit the upside attempts, with the US dollar weakness overnight likely to add to the downbeat tone around the spot. The USD index consolidates the correction from three-week of 98.40 near 98.20 at Tokyo open, down -0.15% so far.  

Meanwhile, the risk sentiment remains the main market driver, as the Yen buyers ignore the below estimates Japanese Producer Price Index (PPI). Next of relevance for the pair is likely to be the US inflation report and the Fed Chair Powell’s testimony due later in the NA session.

USD/JPY Technical levels to consider