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USD/JPY steadies around 110, eyes on Wall Street opening bell

  • 10-year US Treasury bond yield gains more than 1.5%.
  • Wall Street looks to open in positive territory. 
  • US Dollar Index turns flat on day below 98.80.

The USD/JPY pair climbed to its highest level since January 21st at 110.14 during the early trading hours of the European session but struggled to preserve its bullish momentum amid a lack of demand for the greenback. As of writing, the pair was moving sideways near the 110 psychological level, adding 0.2% on a daily basis.

Risk on flows dominate markets

The upbeat market mood as reflected by the strong performance of global equity indexes on Wednesday makes it difficult for the safe-haven JPY to stay resilient against its major rivals.

Reports revealing an increase in the recovery rate of coronavirus patients seem to be providing a boost to the risk sentiment. The 10-year US Treasury bond yield, which usually shows a positive correlation with the USD/JPY pair, is adding nearly 2% on the day as well.

Meanwhile, Wall Street's main indexes look to open the day in fresh record highs with futures rising between 0.3% and 0.4%. 

On the other hand, the US Dollar Index seems to be taking a break following the latest rally that carried it to its highest level since early October at 98.95 on Tuesday. In the absence of significant macroeconomic data releases, the index staying flat on the day near 98.75. FOMC Chairman Powell is not expected to deliver any remarks on the policy outlook in his second day of testimony before the House Financial Services Committee of the Congress. 

The only data from featured in the Asian economic docket will be the Producer Price Index.

Technical levels to watch for

 

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