USD/JPY extends sideways grind below 109.00 as focus shifts to US CPI data
|- USD/JPY is struggling to find direction on Wednesday.
- US Dollar Index edges higher ahead of inflation data.
- Wall Street's main indexes look to open in the negative territory.
The USD/JPY pair tested 109.00 on Tuesday but ended up closing the day in the red at 108.60. On Wednesday, the pair continues to move in a tight range despite the modest USD strength and was last seen gaining 0.1% on the day at 108.70.
DXY rebounds on Wednesday
The risk-averse market environment, as reflected by the sharp declines seen in global major equity indexes, provided a boost to the safe-haven JPY on Tuesday. At the moment, European stocks trade in the positive territory and limit's the JPY's potential gains for the time being. However, the S&P 500 Futures are down 0.4%, suggesting that the market mood is likely to turn dismal in the second half of the day.
Meanwhile, the US Dollar Index (DXY) is up 0.17% on the day at 90.31, helping USD/JPY stay afloat in the positive territory.
Later in the session, the US Bureau of Labor Statistics will release the April Consumer Price Index (CPI) data. Investors expect the Core CPI, which strips volatile food and energy prices, to rise to 2.3% on a yearly basis from 1.6% in March.
A reading of 2.5% or above could help the greenback gather strength against its rivals. However, the impact of inflation data on the USD could remain short-lived following last Friday's disappointing Nonfarm Payrolls report.
Technical levels to watch for
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