The USD/JPY has been seen holding its overnight decline following the release of the US CPI data to a close three-week trough.

The recovering rates on US government bonds served to alleviate USD negative pressure and provide additional assistance. The cautious mindset supported the relatively secure JPY and effectively put a stop to any major rebound in the currency.

An Assessment Of The Technical Aspects

USD/JPY CHART Source: Tradingview.com

A limited range over mid-114.00s was maintained moving into the European session, as the USD/JPY pair extended its overnight decline to a nearly three-week low.

The Outlook For The Fundamentals

After an early rise to the 115.45 mark, the USD/JPY pair experienced intense selling on Wednesday, as a result of the wide-ranging US Dollar sell-off after the release of the US CPI data.

Even while the data supported predictions that the Federal Reserve would begin increasing interest rates in March, it was not regarded as alarming enough to alter the Fed’s existing hawkish perspective, and the Dollar suffered as a result.

As investors digested a spike in consumer prices in the United States, the Dollar found some strength amid a positive comeback in the rates on US Treasury bonds.

This, in turn, was regarded as a significant reason for the extension of some strength to the USD/JPY exchange rate. Despite this, the cautious market atmosphere benefited the relatively secure Japanese Yen, which helped to keep a lid on any significant rebound, at least for the time being.

Conversely, the inability of the USD/JPY pair to generate any significant traction shows that the short-term negative trend may still be a long way off from being over.

A following decline below the overnight shift low, in the vicinity of 114.40-35, will reinforce the bearish picture and pave the way for a continuation of the recent decline from a five-year high reached on January 4.

Traders are now looking forward to the economic calendar in the United States, which will include the Producer Price Index (PPI) and the typical Weekly Initial Jobless Report later in the day.

The USD will be influenced by the testimony of Fed Governor Lael Brainard about her candidacy as Vice-Chair, as well as the rates on US government bonds. The wider market risk attitude, on the other hand, might give some support to the USD/JPY cross.

The GBP/JPY cross gave up a significant portion of its small intraday gains and was last seen lingering towards the low end of the scale of the daily exchange range, around the 157.00 level, at the close of trade.

The cross received some positive impetus during the early portion of Thursday’s trade, but it was unable to consolidate on the advance and was met with fresh supply in the 157.45 area of the chart.

The most recent political event in the United Kingdom worked as a headwind for the Pound and limited the upward potential of the GBP/JPY currency pair.