USD/JPY bounces to 104.25 but remains well offered, now eyeing US CPI

Following a sharp slide to the lowest level since August 2014, the USD/JPY pair is attempting a tepid recovery and is currently trading well above 104.00 mark, around 104.25 level.

Earlier on Thursday, the pair repeated April 28 price-action when BoJ dashed market expectations and refrained from announcing additional stimulus measures. The central bank once again decided to stand pat, which prompted traders to rush towards covering their bearish bets against the Japanese currency.

The bears, however, took breather at lower level, taking some profit off the table after the pair's relentless fall of over 700-pips in less than three week from late May high level of 111.45. 

Moving forward, investors will confront some important releases from the US that includes, inflation data along with Philly Fed Manufacturing Index and weekly Unemployment Claims. However, sell-off in global equity markets might continue to support the safe-haven appeal of the Japanese currency and hence restrict and swift recovery for the USD/JPY pair.

Technical outlook

Slobodan Drvenica, Information & Analysis Manager at Windsor Brokers Ltd. notes, "Technical studies maintain firm bearish tone, with daily RSI entering oversold territory, which may signal corrective action in the near term."

"No significant obstacles seen before 105.53 (former breakpoint) now reverted to strong resistance and 106.00 (session high, reinforced by falling daily Tenkan-sen), below which corrective actions should be limited."

"Res:  104.62; 105.30; 105.53; 106.00
Sup:  103.54; 102.78; 101.90; 100.80"