USD/JPY trades with modest losses below mid-109.00s

The USD/JPY pair remained depressed through the first half of the European session and was last seen hovering near the lower end of its daily trading range, just below mid-109.00s.

The pair struggled to capitalize on the previous day's goodish bounce from 50-day SMA, instead met with some fresh supply on Wednesday and was pressured by a combination of factors. The prevalent cautious mood was seen as a key factor that extended some support to the safe-haven Japanese yen and prompted some selling around the USD/JPY pair.

Bearish traders further took cues from the ongoing decline in the US Treasury bond yields, which kept the US dollar bulls on the defensive. That said, concerns that rising inflationary pressures might force the Fed to start the discussion on tapering its bond purchases acted as a tailwind for the buck. This, in turn, helped limit losses for the USD/JPY pair.

Hence, the key focus will remain on Thursday release of the latest US consumer inflation figures. This will be another piece of important macro data that would set the tone for the FOMC meeting on June 15-16. Heading into the key data risk, investors' reluctance to place any aggressive bets might also lend some support to the USD/JPY pair, at least for the time being.

In the meantime, the US bond yields will play a key role in influencing the USD price dynamics amid absent relevant market moving economic releases. Apart from this, the broader market risk sentiment might provide some impetus to the USD/JPY pair and allow traders to grab some short-term opportunities.

Technical levels to watch