- Nasdaq Composite Index moves into positive territory.
- 10-year US Treasury bond yield rebounds from lows.
- US Dollar Index turns flat on the day above 97.50.
The USD/JPY pair slumped to its lowest level since early January at 105.50 earlier today but staged a modest rebound in the last hour to erase a large portion of its daily losses. As of writing, the pair was trading at 106.20, still losing 0.25% on a daily basis.
Flight-to-safety dominates markets
The market sentiment stays as the primary driver of the pair’s action on Wednesday. With US President Donald Trump calling upon the Fed to cut rates in order to be able to compete with other countries revived concerns over a currency war and ramped up the demand for safe-haven Treasury bonds. The yield on the 10-year reference lost nearly 7% earlier in the day to weigh on the pair. Moreover, Wall Street’s main indexes started the day deep in the negative territory to underline the risk-off atmosphere.
Despite a lack of positive developments, the Nasdaq Composite Index turned positive recently and the 10-year T-bond yield retraced nearly half of its daily drop to allow the pair to pull away from its lows. However, this move seems to be a technical correction rather than a shift in the market sentiment and the pair could find it hard to stretch higher.
Meanwhile, Chicago Fed President Evans today voiced his support for additional rate cuts during an interview in Chicago. “On the basis of low US inflation alone, the July interest rate cut was justified, and more policy accommodation is needed,” Evans told reporters. Following a fall to a session low of 97.31 on Evans’ remarks, the US Dollar Index turned flat on the day a little above 97.50 in the last hour to support the pair’s rebound.
Technical levels to watch for
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