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   “¢   The global flight to safety underpinned JPY and kept exerting downward pressure.
   “¢   A steep decline in the US bond yields does little to revive the USD demand.
   “¢   Oversold conditions prompt some short-covering ahead of the US CPI figures.

The USD/JPY pair reversed an early dip to sub-112.00 level, or near one-month lows, and is currently placed at the top end of its daily trading range.

The pair extended last week’s sharp retracement slide from 11-month tops and kept losing ground for the sixth consecutive session, with a combination of negative forces dragging the pair momentarily below the 112.00 handle during the Asian session on Thursday.  

A sudden spike in volatility, triggered by the ongoing rout across global equity markets, was seen benefitting the Japanese Yen’s safe-haven status and turned out to be one of the key factors weighing on the major.

The global flight to safety was further reinforced by a steep decline in the US Treasury bond yields, which undermined the US Dollar demand and did little to stall the pair’s fall to the lowest level since September 18.

The selling pressure now seems to have abated, at least for the time being, with the pair recovering around 25-pips from an intraday low level of 111.97 amid near-term oversold conditions on hourly charts.  

Moving ahead, investors now look forward to the latest US consumer inflation figures, a key highlight from today’s US economic docket, which might influence Fed rate hike expectations and eventually provide some fresh impetus.

Technical levels to watch

Immediate resistance is pegged near the 112.55 level, above which the momentum could further get extended towards the 112.95-113.00 supply zone. On the flip side, the 112.00 mark now becomes an immediate support to defend, which if broken decisively is likely to accelerate the fall towards 111.65 support area.