- USD/JPY looks to build on the overnight bounce from two-week lows.
- Improving risk sentiment, a modest USD uptick remained supportive.
- The upside remains capped amid concerns over China’s coronavirus.
The USD/JPY pair edged higher on the last trading day of the week and moved further away from two-week lows set in the previous session.
The pair extended its recent retracement slide from multi-month tops and witnessed some follow-through weakness for the third consecutive session on Thursday. Concerns over China’s coronavirus outbreak continued benefitting the Japanese yen’s perceived safe-haven status and turned out to be one of the key factors behind the pair’s ongoing slide.
Bulls refrain from placing aggressive bets
The pair, however, managed to find some support ahead of 50-day SMA and a combination of factors provided an additional lift during the Asian session on Friday. A slight improvement in the global risk sentiment allowed the US Treasury bond yields to gain some positive traction, which eventually underpinned the US dollar demand and led to the pair’s modest uptick.
On the economic data front, Japan’s core consumer price index (CPI) rose 0.7% YoY in December as compared to a 0.5% rise in the previous month. Meanwhile, the headline CPI rose 0.8% and surpassed forecast of 0.4% by a big margin. Adding to this, the flash version of the Japanese Manufacturing PMI also bettered market expectations and kept a lid on the pair’s attempted recovery.
Moving ahead, the broader market risk sentiment and the USD price dynamics might continue to play a key role in influencing the pair’s momentum on Friday. Later during the early North-American session, the release of flash US Manufacturing and Services PMI will also be looked upon to grab some short-term trading opportunities.
Technical levels to watch
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