USD/JPY refreshes session tops, approaching 111.00 mark post-US CPI

• US headline CPI flat m/m; eases to 1.6% on a yearly basis.
• Stable core CPI figures lift US bond yields and the USD.
• The prevalent risk-on mood remains supportive of the up-move.

The buying interest around the buck picked up pace after US consumer inflation figures and lifted the USD/JPY pair to fresh YTD tops, further closer to the 111.00 handle.

Data released this Wednesday showed that the headline US CPI remained flat on a monthly basis in January but yearly rate eased less than expected 1.5% from 1.9%. Meanwhile, the positive surprise came from hotter than expected core CPI print, which held steady at 2.2% y/y rate and 0.2% on a monthly basis.

The US Treasury bond yields climbed across the board in reaction to stronger core CPI readings and eventually provided a strong boost to the US Dollar. This, against the backdrop of fading safe-haven demand amid US-China trade optimism, assisted the pair to add to its goodish intraday gains and climb to its highest level since late December.

With today's important macro data out of the way, it would now be interesting to see if the pair is able to build on the positive momentum or witness some profit-taking at higher levels, especially after the recent upsurge of over 200-pips since the beginning of this month.

Technical outlook

Valeria Bednarik, FXStreet's own American Chief Analyst explains, “technical indicators in the 4 hours chart lack directional strength but continue developing near their recent highs, the Momentum above the 100 level and the RSI in overbought territory.”

“The 111.00 figure is the next relevant resistance, with further gains expected once beyond it. The downside seems limited by buying interest aligned in the 110.00/10 price zone,” she added further.

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