USD/JPY consolidates around mid-109.00s, US data/Powell’s speech awaited
| • Easing geopolitical tensions/softer Tokyo CPI print helps stage a modest rebound.
• Sudden fall in the US bond yields offset reviving USD demand and capping gains.
• Investors eye US macro data and Powell’s speech for some fresh impetus.
The USD/JPY pair now seems to have entered a consolidation phase and was seen oscillating within a narrow trading range, just below mid-109.00s.
The pair stalled this week’s corrective slide from 4-month tops, levels beyond the 111.00 handle, and was being supported by easing geopolitical tensions, which triggered a fresh wave of global risk-on trade.
The same was evident from the prevalent buoyant sentiment across European equity markets and was seen weighing on the Japanese Yen's safe-haven appeal, helping the pair to snap three consecutive days of losing streak.
Meanwhile, reviving US Dollar demand, coupled with softer Tokyo core CPI print provided an additional boost and lifted the pair to an intraday high level of 109.74 during the Asian session on Friday.
Further gains, however, remained capped, with a sudden fall in the US Treasury bond yields further collaborating towards keeping a lid on any meaningful up-move for the major.
Nevertheless, the pair has still managed to hold with modest daily gains but still remains on track to post steep weekly declines, reversing all of the previous week's up-move.
Next in focus would be the release of US durable goods orders data, which followed by the Fed Chair Jerome Powell's scheduled speech would now be looked upon for meaningful impetus on the last trading day of the week.
Technical levels to watch
The 109.00 handle now seems to protect the immediate downside, which if broken could accelerate the slide towards 108.70-65 horizontal support. On the flip side, momentum beyond 109.75-80 immediate resistance now seems to lift the pair back above the key 110.00 psychological mark towards retesting the very important 200-day SMA barrier near the 110.15-20 region.
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