USD/JPY drops to 110.70 as 10-year US T-bond yield erases 1.5%

• Sharp drop seen in the 10-year T-bond yield weighs on the greenback.
• Wall Street turns flat on the day following the negative start.
• US Dollar Index looks to make its lowest daily close in three weeks.

The USD/JPY pair broke below the 111 mark  during the European morning on Tuesday and continued to erase the gains it recorded on Monday. As of writing, the pair was trading at 110.70, losing 0.33% on a daily basis.

The selling pressure surrounding the greenback in the second half of the day gathered strength and dragged the US Dollar Index to its lowest level in three weeks. Although today’s mixed data from the U.S. didn’t necessarily trigger a USD sell-off, a sharp fall in the Treasury bond yields weighed on the currency. As of writing, the 10-year reference was down 1.5% and the DXY was losing 0.27% at 96.15.

According to the U.S. Census Bureau, housing starts in December declined by 11.2% to miss the market expectation of -0.5%. On the other hand, the Consumer Board’s Consumer Confidence Index improved in February and the Richmond Fed Manufacturing ındex rose to 16 from -2 in January.  

In the first day of his two-day testimony, FOMC Chairman Jerome Powell repeated that the Fed would allow some time for clarity on the economic outlook and that they were not in any rush to make a judgement about monetary policy changes. Meanwhile, after starting the day in the negative territory, major equity indexes in the U.S. turned flat on the day to help the pair limit its losses for the time being.  

Technical levels to consider