USD/JPY reverses an early dip, back above 109.00 handle
|- Positive US bond yields underpinned the USD and helped gain some traction.
- The upside is likely to remain limited amid persistent US-China trade uncertainty.
- Wednesday’s US CPI print and Powell’s testimony will be eyed for a fresh impetus.
The USD/JPY pair reversed an early dip to weekly lows, with bulls making a fresh attempt to build on the momentum further beyond the 109.00 round-figure mark.
The pair on Tuesday failed to capitalize on its early uptick to the 109.30 region and finally ended lower for the third consecutive session amid fading optimism over the possibility of a US-China trade deal, which underpinned the Japanese Yen's safe-haven demand.
Focus on trade, US CPI, Powell’s testimony
The US President Donald Trump said on Tuesday that the US will increase tariffs on China in case the first step of a broader agreement isn’t reached. This comes on the back of Trump's indication over the weekend he would only sign if it was the “right deal” for America.
The comments weighed on investors' sentiment, which was evident from the prevalent risk-off mood around equity markets. However, a modest pickup in the US Treasury bond yields extended some support to the US Dollar and helped the pair to bounce off daily lows.
As investors await any further trade developments, the upside is likely to remain limited as market participants now look forward to the latest US consumer inflation figures and the Fed Chair Jerome Powell's testimony before determining the pair's next leg of a directional move.
Technical levels to watch
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