- Investors looked past Wednesday’s softer US consumer inflation figures.
- A turnaround in the US bond yields prompts some USD short-covering.
- Reviving safe-haven demand supports the JPY and capped further gains.
The USD/JPY pair recovered a major of its early slide to weekly lows and jumped back above mid-108.00s in the last hour, albeit lacked any strong follow-through.
Despite Wednesday’s softer US consumer inflation figures for the month of May, the US Dollar managed to attract some meaningful bids and was seen as one of the key factors lending some support.
In fact, the headline US CPI eased more than expected to 1.8% yearly rate in May and core CPI also ticked lower to 2.0% from 2.1% recorded in the previous month, reinforcing Fed rate cut expectations.
With an eventual Fed rate cut move for July largely priced in the market, investors now seemed inclined to cover their USD bearish positions heading into next week’s June FOMC policy meeting.
Bulls further took cues from a sudden turnaround in the US Treasury bond yields, through the prevailing cautious mood underpinned the Japanese Yen’s safe-haven demand and capped any further gains.
Hence, it would be prudent to wait for a strong follow-through buying before confirming that the pair might have actually bottomed out in the near-term or positioning for any further recovery move.
Technical level to watch