Struggles to build on overnight strong up-move despite a goodish USD rebound. Bulls tracked retracing US bond yields, tough risk-on mood helped limit losses. Today’s mixed US economic data does little to provide any meaningful impetus.
The USD/JPY pair extended its consolidative price action through the early North-American session and is currently placed at the lower end of its daily trading range, around the 112.30-25 region.
The pair struggled to capitalize on overnight strong up-move and was seen oscillating in a narrow trading range, just below the two-month high level of 112.45 touched earlier today. A combination of diverging forces failed to provide any meaningful impetus and led to a subdued/range-bound price action on Wednesday.
Bulls seemed uninspired by a modest US Dollar rebound from seven-week lows and rather took cues from retracing US Treasury bond yields. In fact, the benchmark 10-year bond yields reversed early gains to the highest level since May and turned out to be one of the key factors behind the pair's latest leg of downtick over the past couple of hours.
The corrective slide, so far, has been limited and seemed rather unaffected by today's mixed US housing market data, coming in to show that building permits declined more than expected in August but was largely negated by a stronger than expected rise in housing starts and a larger than expected fall in the US current account deficit.
Meanwhile, signs of stability in global equity markets, which tends to derive the Japanese Yen's safe-haven demand, did little to influence the price-action, albeit collaborated towards limiting any meaningful corrective slide, at least for the time being.
Any further downside is likely to find support near the 112.00 handle, which if broken might prompt some long-unwinding pressure and drag the pair further towards 111.85-80 horizontal support. On the flip side, a sustained move beyond the 112.35-45 region now seems to assist the pair to aim towards reclaiming the 113.00 handle with some intermediate resistance near the 112.80 level.