USD/JPY jumps to 108.60, retreats slightly as Wall Street suffers losses

• Sudden USD demand in the early NA session lifts the pair.
• Wall Street opens in red to cap the pair’s gains.
• US 10-year T-bond yield drops more than 1.5%.

The USD/JPY pair gained traction and added more than 50 pips in the early NA session to touch a fresh daily high at 108.60. With risk-aversion taking control of the price action, the pair eased from its highs and was last seen trading at 108.45, up 0.05% on the day.

The US Dollar Index, which hasn’t reacted to today’s inflation data, met a strong buying wave and rose to a fresh two-day high of 95.76. Although there were no clear catalysts behind the USD’s upsurge,   reports of Turkish troops moving into the Syrian border seems to have triggered a flight-to-safety and boosted the demand for the greenback. At the moment, the DXY is up 0.1% on the day at 95.65. Earlier today, the data published by the U.S. Bureau of Labor Statistics showed that the annual core CPI in December stayed unchanged at 2.2% to match analysts’ estimates.

Despite the USD strength, however, the risk-off mood as reflected by a 1.6% fall in the 10-year T-bond yield and a fall in major equity indexes also allowed the JPY  to  stay resilient.  

With no other macroeconomic data releases to watch in the remainder of the day, markets’ risk perception is likely to continue to drive the pair’s price action.

Technical levels to consider