USD/JPY AIMS TO RECAPTURE 137.00 DESPITE RISK-OFF MOOD FADES, FOCUS IN ON US SERVICES PMI

USD/JPY is looking to recapture the 137.00 resistance despite the risk appetite having improved.

Modest dovish commentary from Federal Reserve Waller has triggered volatility in the USD Index.

Bank of Japan might infuse more liquidity to fade the impact of a fresh decline in the Tokyo inflation.

USD/JPY is struggling to shift its auction above the 38.2% Fibo retracement plotted at 136.85.

USD/JPY is juggling in a limited range around 136.60 in the Asian session. The asset has rebounded from 136.50 and is aiming to recapture the immediate resistance of 137.00 as the Tokyo Inflation has softened dramatically for the first time after a nine-month period escalation. Lower food and energy prices have trimmed the headline Consumer Price Index (CPI) while the core inflation that strips off the impact of food and oil steadily improved.

The US Dollar Index (DXY) is on the verge of delivering a downside break below 104.80 amid an absence of recovery signals. The downside pressure in the USD Index has built amid modest dovish commentary from Federal Reserve (Fed) Governor Christopher Waller. Fed Waller cited February’s inflation recovery as a one-time blip and the price pressures will resume their downtrend from next month.

S&P500 futures have recovered the majority of losses recorded in the Asian session, portraying a decent recovery in the risk appetite of the market participants. The demand for US government bonds has recovered marginally amid ease in the risk aversion theme. This has pushed the 10-year US Treasury yields below 4.05%.