USD/JPY drops below 110.00 on renewed USD weakness

USD struggles to find demand after inflation report

After spending the first half of the day moving sideways above 110.00, the USD/JPY pair lost its traction in the early American session and was last seen losing 0.1% on the day at 109.88.

The renewed selling pressure surrounding the greenback seems to be the primary driver of USD/JPY weakness. After the data published by the US Bureau of Labor Statistics revealed that the annual Core Consumer Price Index (CPI) declined to 4% in August from 4.3% in July, the US Dollar Index (DXY) turned south. As of writing, the DXY was down 0.3% at 92.33.

Furthermore, the benchmark 10-year US Treasury bond yield, which gained as much as 1% earlier in the day, is now losing 0.7%, putting additional weight on USD/JPY’s shoulders.
In the meantime, US stock index futures started to push higher following the US inflation data, suggesting that Wall Street’s main indexes are likely to open in the positive territory. In case risk flows start to dominate the financial markets, the USD could find it difficult to stage a rebound and cause USD/JPY to end the day in the negative territory.
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