- Risk-aversion dominates markets on Wednesday.
- 10-year US T-bond yield drops more than 2%.
- US Dollar Index eases from highs.
The USD/JPY pair lost its traction in the last hour and broke below its daily consolidation channel as risk sentiment continues to dominate the market action on Wednesday. As of writing, the pair was trading at 110.35, losing 0.25% on a daily basis.
Following yesterday’s rebound, which seemed to be a technical correction amid a lack of positive macro developments, the 10-year U.S. Treasury Bond yield extended its losses on Wednesday and slumped to its lowest level since mid-December 2017 at 2.349%, reflecting the risk-off mood and fears over a possible recession in the U.S., which helps traditional safe-havens like the JPY find demand in the session. Furthermore, major European equity indexes turned red on the day and the S&P 500 Futures erased its early gains to suggest that Wall Street is likely to start the day under pressure.
Meanwhile, after finding resistance near the 97 handle, the US Dollar Index reversed its course ahead of the trade balance data from the U.S. and allowed the pair to continue to push lower. At the moment, the DXY is down 0.08% on the day at 96.72.
Technical levels to consider
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