- USD / JPY gained positive traction for the third day in a row on Tuesday.
- Risk appetite weighs on the safe-haven JPY and provides a modest gain to the pair.
- A subdued action around the USD could limit gains ahead of the US CPI report.
The pair USD/JPY It has moved higher during the Asian session on Tuesday, setting a daily high around the 110.10 region. However, at the time of writing, the pair has returned all its initial gains and remains stable around the 110.00 level.
A combination of support factors has helped the USD / JPY pair to rise for the third day in a row on Tuesday and to re-approach the highs of the previous day. The underlying bullish sentiment, represented by a positive tone around the stock markets, has weighed on the safe-haven Japanese yen and acted as a tailwind for the pair. The bulls also took cues for a modest rally in US Treasury yields, bolstered by expectations of an imminent Fed announcement.
Having said that, a subdued action around the price of the US dollar has limited any significant rises. The USD bulls now appear to have stayed on the sidelines and await the release of the latest US consumer inflation figures, which will be released at the start of the American session today. The CPI report could provide new clues as to the likely timing of the Fed’s downsizing plan. This, in turn, will influence the USD and could generate some significant momentum to the USD / JPY pair ahead of the crucial FOMC meeting on September 20-21.
Meanwhile, US bond yields could play a key role in driving demand for the dollar. This, coupled with broader market risk sentiment, could help investors seize some short-term opportunities around the USD / JPY pair. From a technical perspective, the recent sideways consolidation moves witnessed in the last four weeks point to indecision among investors and warrant some caution before opening any aggressive directional positions. This makes it wise to wait for some strong continuation buying before positioning for any significant moves ahead of key data.
USD / JPY technical levels
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