USD/JPY trying to stabilize around 110.00 mark

After yesterday's pull-back from near two-month lows, the USD/JPY pair seems to have entered a consolidation phase and was seen oscillating in a narrow trading band around the key 110.00 psychological mark. 

Today's disappointing release of Core Machinery Orders data from Japan was largely negated by better than expected PPI print and did little to influence the Japanese Yen; while a modest pickup in the US Dollar demand was seen protecting immediate downside for the major. 

Moreover, signs of stability returning back to global financial markets, following yesterday's turbulent session on escalating geopolitical tensions between the US and N. Korea, might have also held traders back from initiating fresh bearish bets, eventually leading to subdued/range bound price action through Asian session Thursday. 

Today's US economic docket features the release of PPI print and weekly jobless claims, which would be looked upon to grab some short-term trading opportunities. The key focus, however, would remain on Friday's consumer inflation figures from the US, which might influence Fed rate hike expectations and help determine the pair's near-term trajectory.

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Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet writes: "An erratic recovery from the low of 109.56 failed to take out the downward sloping 5-DMA in the Asian session today.  When viewed in light of the drop in the risk reversals, the rejection at the 5-DMA suggests the spot is more likely to revisit yesterday’s low of 109.56 and 109.45 [support offered by the trend line sloping upwards from the April 17 low and June 14 low]."

"An end of the day close below 109.45, coupled with a break below 2.15 on the yield spread chart would be an advance indicator of a big sell-off to sub-108.00 levels. On the higher side, only an end of the day close above 110.98 [61.8% Fib R of 108.80-114.49] would revive the bullish trade" he added.