- US stocks turn positive after starting the day in the red.
- US Dollar Index fails to stay above 95 on dismal data.
- 10-year T-bond yields extend to new daily highs above 2.84%.
After testing the 110 mark and finding a short-term support at that level during the Asian session, the USD/JPY pair gathered momentum and marched higher toward mid-110s on the back of a stronger greenback. Although the USD started to weaken in the NA session, the pair continues to stay in the positive territory as the improved market sentiment weighs on the safe-haven JPY. As of writing, the pair was trading at 110.35, adding 0.08% on the day.
Earlier in the session, the Bureau of Economic Analysis reported that the real-GDP growth for the first quarter of the year in the United States eased to 2% in the third estimate to fall short of the experts’ expectation of 2.2%. The US Dollar Index, which advanced to its highest level in more than nine months at 95.25, reversed its course and dipped below the 95 mark.
On the other hand, the risk appetite seems to be coming back to the markets, dampening the demand for the safe-haven JPY. At the moment, the 10-year US T-bond yield is at its highest level of the day at 2.846%. Furthermore, the Dow Jones Industrial Average and the S&P 500 are up 0.3% and 0.2% respectively.
On the last day of the week, Japan’s Statistics Bureau will be releasing the critical annual core-CPI data for Tokyo, which is expected to improve to 0.6% in June from 0.5% in May. A weak reading could suggest that the BoJ’s yield curve control strategy does not have the desired impact and force the JPY to weaken against its rivals.
Technical levels to consider
The immediate support for the pair aligns at 110 (psychological level) ahead of 109.65 (200-DMA) and 109.20 (Jun. 8 low). On the upside, resistances could be seen at 110.50 (Jun. 27 high), 110.90 (Jun. 15 high) and 111.40 (May. 21 high).
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