USD / JPY erases initial gains, seems to close sideways near 110.20

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  • USD / JPY lost traction after climbing towards 110.50.
  • The US Dollar Index remains on track to close for the third day in a row in positive territory.
  • The 10-year US Treasury yield is losing more than 3%.

The pair USD/JPY it retained its bullish momentum earlier in the day and reached its strongest level in a week at 110.45. In the second half of the day, however, the pair lost traction and was last seen posting small daily losses at 110.20.

Falling US Treasury Yields Limits USD / JPY Rise

The broad-based USD strength provided a boost to USD / JPY earlier in the day. The US dollar index, which closed the first two days of the week in positive territory, extended its recovery to 92.86 on Wednesday. However, the sharp drop in US Treasury yields caused the pair to change direction. Currently, the benchmark 10-year US Treasury yield is shedding more than 3% on the day.

US data showed on Wednesday that JOLTS job openings rose to a new high of 10.9 million in July. On a negative note, the IBD / TIPP Economic Optimism Index fell to its weakest level in 2021 at 48.5.

Meanwhile, the Federal Reserve Beige Book showed that economic growth lost some momentum from early July through August. The publication also revealed that several districts indicated that companies anticipate significant increases in their sales prices in the coming months.

On Thursday, data for foreign investment in Japan stocks and machinery orders for August will be placed on the Japanese economic docket, which market participants are likely to ignore.

Technical levels

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