USD/JPY advances above 110.00 on recovering US T-bond yields
- USD/JPY is edging higher following a two-day slide.
- 10-year US Treasury bond yield is up nearly 1% on Wednesday.
- US Dollar Index stays in the positive territory ahead of FOMC's policy announcements.
The USD/JPY pair started the week on the back for and closed the first two days in the negative territory, losing 80 pips during that time span. On Wednesday, however, the pair managed to stage a rebound and was last seen gaining 0.3% on the day at 110.09.
USD stays resilient against its rivals on Wednesday
The sharp decline witnessed in the US Treasury bond yields and the broad-based USD weakness weighed on USD/JPY on Monday and Tuesday. Pressured by the safe-haven flows, the benchmark 10-year US T-bond yield fell more than 4% on Tuesday and the US Dollar Index (DXY) dropped to a 12-day low of 92.31.
Ahead of the FOMC's monetary policy announcements, the 10-year US T-bond yield is up nearly 1% and the DXY stays in the positive territory, helping USD/JPY edge higher.
Earlier in the day, the Bank of Japan reiterated in its Summary of Opinions that it remains important not to tighten the monetary policy prematurely. "In Japan's economy, downward pressure on consumption is likely to intensify in the short run due to the reinstatement of the state of emergency," the publication further read.
Previewing the FOMC's July policy meeting, "FOMC Chairman Jerome Powell is highly unlikely to reveal or even expound on any of Fed's considerations or plans on Wednesday afternoon," said FXStreet senior analyst Joseph Trevisani. "That will not, of course, stop the markets from running with a perception. The Fed does not intend to relent on its policy accommodation."
Fed Interest Rate Decision Preview: The horns of an inflation dilemma.
Technical levels to watch for