USD/JPY surrenders recovery gains, back around mid-111.00s post-US data

   •  US PPI unexpectedly contracted in December.
   •  Weekly jobless claims also miss expectations.
   •  USD losses some more ground after softer data.

The USD/JPY pair erased all of its early modest recovery gains and has now dropped to the lower end of its daily trading range, around mid-111.00s post-US economic releases.

The pair struggled to build on its tepid recovery move from the previous session's over one-month lows and failed just ahead of the 112.00 handle amid a fresh wave of US Dollar selling pressure, primarily led by the ECB minutes-led upsurge in the EUR/USD major. 

The greenback lost some additional ground after data released from the US showed Producer Price Index (PPI) unexpectedly contracted in December, coming in at -0.1% m-o-m as against 0.4% rise recorded in the previous month. Adding to the disappointment, the initial weekly jobless claims also missed expectations and rose to 261K during the week ended Jan. 6.

Against the backdrop of weaker US Treasury bond yields, today's downbeat data did little to lend any support to the greenback and exerted some fresh downward pressure on the pair. 

Technical outlook

Valeria Bednarik, American Chief Analyst at FXStreet writes, “the pair remains biased lower according to technical readings in the 4 hours chart and despite the latest recovery, as the price remains far below its 100 and 200 SMAs, with the shortest slowly gaining traction downward. In the same chart, technical indicators lost upward strength after correction oversold conditions, now turning modestly lower well below their mid-lines. Additional declines should be expected below 111.20, towards the 110.80 price zone, where the pair bottomed last November, while below this last, an approach to the 110.00 figure will be on the table.”