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USD/JPY recovers to 107 area as markets wait for Powell's speech

  • 10-year US T-bond yield extends slide, drops below 2%.
  • US Dollar Index stays calm near the 96 mark.
  • Fed's Williams & Bostic, FOMC Chairman Powell are scheduled to speak later today.

After closing the day virtually unchanged near the 107.30 mark on Monday, the USD/JPY pair came under a renewed selling pressure on Tuesday as none of the latest developments helped ease the geopolitical tensions and allowed safe-haven assets to continue to outperform their rivals. Following a drop to its lowest level since early January at 106.80, the pair staged a technical correction and was last seen trading near 107, erasing 0.25% on a daily basis.

The ongoing conflict in the Middle East, the uncertainty surrounding the U.S.-China trade talks and expectations of the Fed cutting rates in July weighed on the 10-year US Treasury bond yield, which has a strong correlation with the USD/JPY pair, on Tuesday and dragged it below the critical 2% mark. Reflecting the sour sentiment, the S&P 500 Futures is posting modest losses on Tuesday, suggesting that Wall Street could start the day in the negative territory and allow safer assets to draw interest in the second half of the day.

Meanwhile, the US Dollar Index is struggling to make a meaningful recovery and stays close to the 96 mark as investors are moving to the sidelines ahead of the day's key events. 

Later in the session, NY Fed President Williams, FOMC Chairman Powell, and Atlanta Fed President Bostic will be delivering speeches. Moreover, the U.S. economic docket will feature new home sales data, Conference Consumer Confidence Survey, and the Richmond Fed Manufacturing Index. 

Technical levels to consider 

 

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