• USD struggles to gain traction despite surging bond yields.
• Cautious mood underpins JPY’s safe-haven appeal.
• US economic data eyed for fresh impetus.
The USD/JPY pair surrendered its early recovery gains to the 109.00 handle and retreated around 35-pips from session tops.
Despite the ongoing upsurge in the US Treasury bond yields, a modest US Dollar rebound lacked any follow-through traction and failed to assist the pair to build on its early uptick.
Adding to this, a mildly softer tone surrounding European equity markets was seen underpinning the Japanese Yen's safe-haven appeal and further collaborated to the pair's retracement since the early European session.
Currently trading around the 108.70 region, traders now look forward to the US economic docket, featuring the release of Core PCE Price Index and personal income/spending data, in order to grab some short-term opportunities.
The key focus, however, would be on this week's important US macro releases, including the keenly watched NFP, which along with the highly anticipated FOMC decision would help determine the pair's next leg of directional move.
Technical levels to watch
“the ADX line has topped out and is moving lower, indicating the bear run has run out of steam. In a way, the declining ADX adds credence to the positive RSI divergence. Hence, a corrective rally to the descending trendline resistance of 110.00 cannot be ruled out.”
“The 10-day MA (at 109.87) trends south, thus corrective rally likely to be capped above 110.00. A close above 110.00 would signal temporary low has been made” he adds further.
Source:fxstreet.com
