USD/JPY fades upside momentum above 107.00 after Japan inflation data

USD/JPY drops to 107.16 after Japan’s inflation data flashed mixed results ahead of the Tokyo open on Friday. In doing so, the quote prints losses for the first time in three days. Other than the mixed CPI figures, sluggish risk-tone could also be cited as a reason for the pair’s downbeat performance.

Tokyo Consumer Price Index arrived at +0.3% YoY in June versus +0.6% expected and +0.4% last. Details suggest that the key Tokyo CPI ex-Fresh Food gauge, mostly known as Core CPI matched 0.2% forecast and prior.

Read: Tokyo CPI ex Fresh Food steadies at +0.2% YoY in June vs. +0.2% expected

Earlier during the day, BOJ Governor Haruhiko Kuroda struck downbeat statements. The BOJ leader said that the coronavirus (COVID-19) pandemic has had a severe impact on countries all over the world, and Japan is no exception. The policymaker also cited fears that Japan’s GDP for the second quarter (Q2) could see considerable contraction.

On the other hand, new board member Seiji Adachi said, via Mainichi newspaper, that the central bank will control the interest rates while avoiding one-sided rises, to prevent collapse in Japan’s finances.

Looking at the risk catalysts, the fears of the wider virus outbreak in the US than currently noted seem to occupy the driver’s seat. Also questioning the risks could be the US trade tussles with China, the European Union (EU) and the UK. Additionally, the latest sanctions on Iran and blast in Tehran add to the risk-off factors.

However, S&P 500 Futures seem to ignore the downbeat signs while taking the bids near 3,080, up 0.25% on a day. Further, the US 10-year Treasury yields also part ways from the previous day’s fall to mark 0.682% as a quote.

Considering the mixed reaction of the market’s risk-tone sentiment to the negative catalysts, coupled with a light calendar and off in China, the pair traders might look for fresh qualitative clues to regain the strength.

Technical analysis

A clear break of 10-day SMA, currently around 107.00, favors another attempt to cross a 50-day SMA level of 107.40. Though, bulls are less likely to be convinced unless the pair breaks above 200-day SMA, at 108.40 now. On the contrary, May month low near 105.99 offers strong downside support below 107.00.