A modest pickup in the USD demand/US bond yields helps regain positive traction. Easing global trade tensions weigh on JPY’s safe-haven appeal and remain supportive. Today’s key focus would be on the latest US consumer inflation figures.
The USD/JPY pair built on its intraday steady climb and jumped to fresh session tops, around mid-111.00s in the last hour.
With investors looking past an unexpected decline in the US PPI, for the first time since Feb. 2017, a modest pickup in the US Dollar demand helped the pair to regain positive traction and recover a major part of the overnight slide.
The USD bulls also seemed taking cues from some renewed uptick in the US Treasury bond yields. Adding to this, the prevalent risk-on mood, led by easing global trade tensions, dented the Japanese Yen's safe-haven status and remained supportive of the positive momentum through the early European session.
Further gains, however, are likely to remain capped as traders now start repositioning for today's important release of the latest US consumer inflation figures, which might influence Fed rate hike expectations and eventually provide some fresh directional impetus.
In the meantime, the BoE and ECB monetary policy decisions-led volatility in the FX market might also produce some meaningful trading opportunities ahead of the key US macro data.
Valeria Bednarik, FXStreet's own American Chief Analyst writes: “The 4 hours chart shows that the pair bounced from around a mild bullish 100 SMA that advances above the 200 SMA, somehow indicating that sellers lost strength, and are now reluctant to push the pair sub-111.00. The Momentum indicator in the mentioned chart maintains its downward slope above the 100 level, while the RSI keeps advancing at a moderate pace currently at 58, all of which skews the risk toward the upside.”