USD/JPY eases off highs, stays in the green above 111.50

• USD/JPY loses its bullish momentum near 111.75.
• The US Dollar Index stays in the negative territory near 95.20.
• Fed's Bullard reiterates that the Fed should hold off on further rate hikes.

The USD/JPY pair rose to a fresh 5-day high at 111.75 in the early NA session but struggled to preserve its momentum and retraced its daily gains. As of writing, the pair was still up 0.15% on the day at 111.60.

Although the greenback came under a broad-based selling pressure after the Brexit headlines triggered a sharp rally in the GBP/USD pair, the USD/JPY pair didn't have a difficult time staying in the positive territory as the positively-correlated 10-year US T-bond yield surged to its highest level since August 10 at %2.917. However, major equity indexes in the U.S. started the day lower and failed to make a recovery to suggest that investors are staying away from risky assets. The 10-year T-bond yield also erased its gains in the last hour to weigh on the pair.

In the meantime, St. Louis Fed President, once again, argued that the Fed should hold off on further rate hikes. Bullard further stated that he saw an elevated risk of making a policy error if the Fed continued to raise short-term rates and added that the flattening yield curve and the inflation expectations suggest that the policy is already neutral. The US Dollar Index, which spent the majority of the day above mid-95s, reversed its course and was last seen down 0.25% on the day at 95.17.

With no macroeconomic data releases from the U.S. in the remainder of the session, investors will be waiting for the speeches by FOMC members Williams, Bostic, and Kashkari.

Technical outlook

Despite the fact that the pair lost its bullish momentum, the RSI indicator on the daily chart stays above the 50 mark, suggesting that buyers are still in control of the price action. On the upside, the initial resistance aligns at 111.75 (daily high) ahead of 112.15 (Aug. 1 high) and 112.60 (Jul. 20 high). Supports could be seen at 111.30 (50-DMA), 110.70 (100-DMA) and 110 (psychological level).