USD/JPY is little changed just above 104.50 as major currencies are looking more quiet to start European trading today
Despite the minute changes in dollar pairs to start the day, the focus in the FX market remains on the greenback's vulnerability this week.
USD/JPY breaking below 105.00 yesterday now draws price action closer to 104.50 with the 100-day moving average (red line) @ 104.40 acting as a key support level in limiting any further downside momentum for the time being.
A break below that will put the focus back on the 104.00 handle next.
Meanwhile, buyers have much work to do in order to try and wrestle back any near-term momentum with the key hourly moving averages only seen @ 105.03 and 105.18.
As such, they will have to move back above 105.00 in order to even begin attempting to switch the bias in the pair back towards the upside once again.
The drop in USD/JPY is not helped by the retreat in Treasury yields from the highs earlier in the week but the dollar potentially weakening further isn't helping.
As mentioned yesterday, I'm no big fan of the dollar index but the break back below the broken key trendline resistance now puts the focus back on 90.00 again:
I take that as a sign of dollar sentiment at play right now and adding to the bounce in EUR/USD from its 100-day moving average, things are looking dicey for the dollar.
Looking back to USD/JPY, there are large expiries at 104.95-00 running off on Friday and that may yet keep a lid on gains - which will help to give sellers an added layer of defense should price action revert back higher in the sessions ahead.
As for today, the market will be looking towards US CPI data and Fed chair Powell's speech for more clues on how to proceed.
In the bigger picture, the yen may also see some inflows in the coming weeks amid fiscal repatriation ahead of the Japanese financial year-end. So, that is a factor to also consider when weighing against the technical levels and other factors above.
