USD/JPY bounces off 8-week lows but lacks conviction, US CPI in focus

The USD/JPY pair recovered early lost ground to fresh eight-week lows and has now moved to session tops, around the 109.20-25 region. 

With tensions between the US and N. Korea showing no signs of abating, investors' flight to safety continued benefitting the Japanese Yen and dragged the pair below the 109.00 handle for the first time since June 14. Investors tend to drive traditional safe-haven assets, including the Japanese Yen in times of heightened global uncertainty. 

   •  Ex-US defense official: Any new Korean war could quickly escalate to catastrophe

Meanwhile, a modest US Dollar recovery helped limit further losses and assisted the pair to bounce off session lows. The recovery move, however, lacked any strong follow through traction as investors refrained from placing aggressive bets ahead of the release of US consumer inflation data later during the day.

Along with the US CPI print, speeches from a couple of FOMC members - Dallas Fed President Robert Kaplan and Minneapolis Fed President Neel Kashkari, would also influence Fed rate hike expectations and drive the pair through NY trading session.

   •  Fed to hike rates by 25 bps in Q4 2017 – Reuters Poll

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet writes: "Short-term pullback likely on strong US CPI, but gains likely to be capped around 111.00. A close below 109.36 could yield 105.50 over the next few weeks."

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.