USD / JPY Falls Below 110.50 As US Treasury Yields Trim Initial Gains

• USD / JPY lost its traction during US trading hours.
• The US Dollar Index remains in positive territory above 92.00.
• The 10-year US Treasury yield trimmed most of the daily gains.

After Monday’s crash, the pair USD/JPY made a technical correction and rose above 100.70 during European trading hours. However, the pair lost its traction in the second half of the day and was last seen losing 0.14% on the day at 110.46.

Hours earlier, rising US Treasury yields helped USD / JPY rise. However, after rising nearly 2%, the benchmark 10-year US Treasury yield reversed its direction and erased a large chunk of its daily gains, causing the USD / JPY to turn south. Currently, the 10-year US Treasury yield is up just 0.45% on the day.

Meanwhile, US data showed Tuesday that the Conference Board’s consumer confidence index improved to 127.3 in June from 120 in May. This reading was better than the Reuters estimate of 119, but received little to no reaction from the market.

The US Dollar Index is currently up 0.26% on the day at 92.12, limiting the USD / JPY decline for the time being.

On Wednesday, industrial production data for May will be included in the Japanese economic docket.

Short-term outlook for USD / JPY

Analysts at Credit Suisse believe that USD / JPY has the potential to rise. “USD / JPY remains well supported above the key support of the 13-day exponential average and January uptrend at 110.45 / 03 and we continue to look for a sustained breakout to the upside,” analysts said. “This should expose more important and long-term resistance, starting at 111.93 and extending to the 2019 high at 112.40.”

Technical levels