USD/JPY surrenders early gains closer to weekly tops

The USD/JPY pair surrendered majority of its early gains to 109.78 level and retreated around 20-pips from closer to weekly tops. 

The pair gained some fresh traction during Asian session on Friday but once again failed ahead of the key 110.00 psychological mark following today's release of Japanese core CPI figures that showed consumer prices rose for the seventh straight month in July. 

Tokyo core consumer prices rose 0.5% in July, while, nationwide core consumer price index (CPI), which includes oil products but excludes volatile fresh food prices, came in to show a gain of 0.4% during the reported period. 

   •  Japan’s core CPI rises for the 7th straight month in July

The Japanese Yen was also supported by the BOJ's move to trim the amount of debt purchases, JPY 410 billion as compared to JPY 440 billion bought in the previous operation. 

However, persistent improvement in investors' risk appetite, as depicted by some strong gains in equity markets helped limit losses, at least for the time being. 

The key focus, however, would remain on the much-awaited speech by the Fed Chair Janet Yellen at Jackson Hole Symposium, which would be looked upon for signals over the Fed's monetary policy normalization path and determine the pair's next leg of directional move.

   •  Key US data events reviewed, including Yellen's speech - Nomura

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet writes: "The short term picture for the pair is neutral, given that in the 4 hours chart, the price remains well below its 100 and 200 SMAs, both maintaining their bearish slopes, while technical indicators head nowhere around their mid-lines. Nevertheless, the risk remains towards the downside, with another attempt of breaking below 108.80 probably resulting in a test of the year low set last April at 108.12."