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USD/JPY steadies above 108 ahead of US data

  • 10-year US Treasury bond yield falls for second straight day.
  • US Dollar Index consolidates Monday’s gains above 98.50.
  • Coming up: Industrial Production and Capacity Utilization data from the US.

Despite the dismal market mood on Monday, the USD/JPY pair closed the day above the 108 handle and inched higher today to touch its highest level since August 1 at 108.36. However, with investors waiting for fresh developments surrounding the conflict in the Middle East and refraining from making large bets ahead of tomorrow’s critical Federal Open Market Committee (FOMC) meeting, the pair seems to have gone into a consolidation phase. As of writing, the pair was up 0.05% on the day at 108.17.

Following Monday’s sharp fall, the 10-year US Treasury bond yield seems to be pushing lower on Tuesday to show that the market sentiment is struggling to recover although there were no major developments about the drone attacks on the Saudi oil facilities. Meanwhile, the S&P 500 Futures is posting small losses to suggest that Wall Street is likely to open the day in the negative territory.

Markets turn quiet ahead of FOMC

On the other hand, the US Dollar Index (DXY) seems to be staying relatively calm after Monday’s upsurge, allowing the pair to stay in its daily trading channel. Ahead of the Industrial Production and Capacity Utilization data that will be released by the Federal Reserve later in the day, the DXY is virtually unchanged on the day at 98.63.

Nevertheless, the pair is unlikely to show a significant reaction to the data ahead of  FOMC’s monetary policy announcements tomorrow. Experts expect the Fed to cut its policy rate by 25 basis points tomorrow but the focus will be on FOMC Chairman Powell’s comments on the policy outlook.

Technical levels to watch for


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