USD/JPY fails to extend attempted recovery beyond 110.00 mark

   “¢   Initial signs of stability in equity markets dented the JPY’s relative safe-haven status.
   “¢   Sliding US bond yields held the USD bulls on the defensive and seemed to cap gains.
   “¢   Market participants now eye US consumer inflation figures for some fresh impetus.

The USD/JPY pair failed to capitalize on its early recovery attempt and dropped to fresh session lows in the last hour, closer to three-month lows touched on Thursday.

Despite the fact that the US decided to go ahead with a tariff hike on Chinese goods, the pair gained some positive traction during the Asian session on Friday and climbed to levels just above the key 110.00 psychological mark amid receding safe-haven demand.

The US President Donald Trump’s overnight comments to have further dialogue with his Chinese counterpart in the near future remained supportive of a possible US-China trade deal and dented the Japanese Yen’s relative safe-haven status.

This coupled with some initial signs of stability in equity markets further prompted traders to cover their short positions, especially after the recent slump of nearly 300-pips over the past three weeks or so, from yearly tops set on April 42.

Meanwhile, the ongoing slide in the US Treasury bond yields kept the US Dollar bulls on the defensive and turned out to be one of the key factors that kept a lid on any meaningful recovery rather exerted some fresh downward pressure.  

The downside, however, remained limited, at least for the time being, as market participants now look forward to the important US macro data – the latest consumer inflation figures, due for release later during the early North-American session for some fresh impetus.

Technical levels to watch