- USD / JPY is moving higher ahead of the FOMC meeting.
- US Treasury yields underpin demand for the dollar.
- Investors shy away from safe-haven Japanese yen as risk appetite improves.
The pair USD / JPY extends the gains of the last two days and continues to move higher during the European session on Wednesday, setting a daily high at 109.08, level last seen on April 14. At the time of writing, USD / JPY is trading at 108.95, up 0.23% on the day.
The US dollar DXY index, which measures the strength of the dollar against a basket of major currencies, is gaining ground. After making a low of 90.89, the DXY Index has hit highs at 91.11. The move is due to the boost in the US 10-year yield., which has risen to 1.65% from 1.62% with gains of more than 1% on the day. This, in turn, benefits demand for the dollar as an attractive asset among investors and is therefore putting pressure on the Japanese yen.
Upbeat US Economic Data Continues to Strengthen Investor Risk Appetite, which helps to gain strength for the dollar. Consumer confidence data from the US CB rose to 121.7 points in April from 109 seen in March, beating market expectations of 113.
On the other hand, Japanese authorities kept key short-term rates unchanged at -0.1%, as widely expected on Tuesday, and they lowered their consumer inflation forecast to 0.1% from previous predictions of 0.5%. Retail sales increased 5.2% annually in March. However, concerns about lower inflation expectations and, therefore, lower interest rates, overshadowed the good number of sales.
In addition, the Japanese government is ready to impose strict measures and limit the operation of many companies to curb the increase in coronavirus infections in the country. Investors are now reluctant to open new positions in the Japanese yen.
Now, the focus of attention shifts to the FOMC meeting and the Fed press conference later in the day. Investors wait for these events to unfold to assess market sentiment for significant business opportunities.
USD / JPY technical levels
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