USD/JPY clings to gains near session tops, around mid-109.00s

The USD/JPY pair maintained its bid tone through the mid-European session and was last seen hovering near the top end of its daily trading range, around mid-109.00s.

A combination of supporting factors assisted the USD/JPY pair to regain positive traction on the last day of the week and reverse the previous day's post-US CPI losses. The underlying bullish tone in the financial markets – as depicted by an extended rally in the global financial markets – undermined the safe-haven Japanese yen. This, along with a modest pickup in the US dollar demand, remained supportive of the intraday positive move.

In fact, the key USD Index inched back closer to weekly tops and seemed rather unaffected by the ongoing decline in the US Treasury bond yields. Investors largely shrugged off Thursday's hotter-than-expected US CPI print and remain convinced that the Fed will retain its ultra-lose monetary policy stance for a longer period. This, in turn, dragged the yield on the benchmark 10-year US government bond to the lowest level since early March.

Market participants now look forward to the release of the Preliminary Michigan US Consumer Sentiment index for some impetus. The key focus, however, will remain on the upcoming FOMC policy meeting on June 15-16. Hence, it remains to be seen if bulls are able to capitalize on the move or the USD/JPY pair meets with some fresh supply at higher levels. Nevertheless, the pair remains on track to end flat for the week, pointing to indecision among traders.

Technical levels to watch