USD/JPY moves little post-US CPI, sticks to gains above 110.00 handle

   •  US headline CPI betters estimates on yearly basis; bulls unimpressed with in-line core reading.
   •  Resurgent US bond yields/fading safe-haven demand remains supportive of the strong bid tone.

The USD/JPY pair reversed a mid-European session dip to the 110.00 neighborhood, albeit struggled to gain any follow-through traction post-US inflation data. 

Currently trading around 110.30-35 band, just below three-week tops, the pair had a rather muted reaction to slightly better-than-expected US CPI print. In fact, the headline CPI came in to show m/m rise of 0.2% in April, with the yearly rate inching higher to 2.8% as compared to 2.7% expected.

Market participants, however, seemed unimpressed by mostly in-line core reading, excluding volatile food and energy prices, which matched market estimates and ticking higher to 2.2% y/y and 0.2% on a monthly basis. 

Although the data did little to revive the US Dollar demand, fading safe-haven demand, primarily on the back of a positive outcome from the closely watched US-North Korea summit, helped the pair to hold on to modest daily gains above the very important 200-day SMA. 

Meanwhile, bulls also seemed to track a goodish pickup in the US Treasury bond yields as the focus now shifts to the highly anticipated FOMC monetary policy update, due to be announced during the New-York trading session on Wednesday.

Technical levels to watch

The 110.00 handle now seems to have emerged as an immediate support, which if broken might prompt some fresh selling and accelerate the fall towards the 109.60-50 region. On the flip side, momentum beyond mid-110.00s now seems to assist the pair to make a fresh attempt towards conquering the 111.00 handle.