The USD/JPY pair is fluctuating in a very tight 20-pip range on Friday and struggling to make a decisive move in either direction. As of writing, the pair was virtually unchanged on the day at 106.15.
Eyes on Wall Street
The data published by the US Bureau of Labor Statistics showed that the Core Consumer Price Index (CPI), which excludes volatile energy and food prices, edged higher to 1.7% in August from 1.6% in July. With the initial market reaction, the US Dollar Index (DXY) rebounded modestly from session lows. At the moment, the DXY is still down 0.15% on the day at 93.22.
On the other hand, the S&P 500 futures, which rose as much as 1% earlier in the day, erased a portion of its gains and helped the safe-haven JPY stay resilient against the USD. Additionally, the 10-year US Treasury bond yield is down 0.7% on the day, making it difficult for the pair to turn north. Nevertheless, Wall Street's main indexes remain on track to start the day in the positive territory and USD/JPY could gain traction if risk flows start to dominate the markets in the second half of the day.
Later in the day, the US Department of Treasury will publish its Monthly Budget Statement for August but the market reaction is likely to be muted.
Technical levels to watch for
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