USD/JPY climbs toward 111 on improved market sentiment, stronger USD

• 10-year US T-bond yield turns positive on the day.
• Wall Street gains traction following the negative start.
• US Dollar Index erases all of yesterday’s losses.

After struggling to make a decisive break above 11.50 area earlier in the day, the USD/JPY pair gained traction in the last couple of hours and rose to a fresh session high of 110.92. As of writing, the pair was trading at 110.86, adding 0.14% on a daily basis.

The 10-year T-bond yield, which fell to its lowest level since January 2018 by losing more than 1% in the day  after the FOMC in its dot plot signalled that it didn’t expect any rate hikes in 2019 and only one hike in 2020, staged a strong recovery and turned positive to provide a boost to the positively-correlated USD/JPY pair. Moreover, following a negative start to the day, major equity indexes in the U.S. turned north to reflect improved market sentiment in the session. As of writing, both the Dow Jones Industrial Average and the S&P 500 were up around 0.6% on the day.

In the meantime, the US Dollar Index erased all of the losses that it suffered on the Fed’s dovish shift and supported the pair’s recent upsurge. Earlier today, the Philly Fed reported that its regional manufacturing index rose to 13.7 in March to surpass the market expectation of 4.5 by a wide margin to help greenback push higher. At the moment, the DXY is up 0.5% on the day at 96.40.

Key technical levels