USD/JPY recovers to 109.80 as Wall Street pares early losses

• US Dollar Index remains on track to close above 99.
• Nasdaq and S&P 500 turn positive on the day.
• Core CPI (YoY) in US remained steady at 2.3% in January.

The USD/JPY recovered a portion of its daily losses during the American session but remains on track to close the day in the negative territory. As of writing, the pair was down 0.23% on the day at 109.83.

Market sentiment improves slightly in American session

Earlier in the day, the sour market mood allowed the JPY to find demand as a safe-haven. Resurfacing concerns over the coronavirus outbreak having a more severe impact on the global economy amid a sharp increase in the number of infections triggered a flight to safety.

Although China explained that the sharp upsurge in the number was caused by a change in the method of counting, Asian and European equity indexes suffered losses and the 10-year US Treasury bond yield erased more than 3% at one point during the European session. Wall Street's main indexes also started the day deep in the negative territory.

However, both the S&P 500 and the Nasdaq Composite erased early losses to turn positive on the day and the 10-year US Treasury bond yield retraced the majority of its drop to reflect a recovering sentiment in the second half of the day.

On the other hand, the US Dollar Index (DXY) climbed above the 99 mark to help the pair pull away from its daily lows. The data from the US showed that the annual core CPI in January remained steady at 2.3% and beat the market expectation of 2.2% to lift the DXY higher. At the moment, the index is looking to register its highest daily close since early October.

The only macroeconomic data featured in the Japanese docket will be the Teritary Industry Index. 

Technical levels to watch for