- USD/JPY slips to lowest since January 10 despite the bounce in the treasury yields.
- USD/JPY may see a minor recovery if the equities turn positive.
- The strengthening odds of Fed rate cut will likely keep gains under check.
The American Dollar continues to lose ground in Asia, despite the minor uptick in the treasury yields.
USD/JPY, in particular, dropped to 107.86 – the lowest level since January 10 – soon before press time, ignoring the US 10-year treasury yield’s recovery to 2.09% from the 17-month low of 1.06% hit on Monday.
The two-year yield, which is more sensitive to short-term interest rate expectations, has also recovered from the multi-month low of 1.81% hit on Monday to trade at 1.86%.
So far, however, the bounce in the treasury yields has failed to put a bid under the greenback.
Looking forward, the currency pair may witness a minor corrective bounce if the yields continue to recover ground and the futures on the S&P 500 turn positive. As of writing, the futures are flashing a 0.12% loss.
It is worth noting that markets are now expecting the Fed to cut rates by 63 basis points by the year-end. As a result, corrective rally in USD/JPY, if any, will likely be short-lived.
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