USD/JPY finds resistance at 110 as DXY retreats toward 96

• 10-year US T-bond yield erases part of early gains.
• US Dollar Index drops to a fresh 5-day low at 96.10.
• Wall Street loses its traction, turns flat on the day.

Boosted by the strong start to the day in Wall Street, the USD/JPY pair rose to its highest level of 2019 at 110 but failed to preserve its momentum as the greenback came under a renewed selling pressure in the last hour. As of writing, the pair was still up 0.2% on the day at 109.63.

The Dow Jones Industrial Average opened more than 1% higher on Wednesday supported by strong earnings data. However, with the latest headlines suggesting that the government shutdown in the U.S. is unlikely to end anytime soon, the sentiment soured and the S&P 500 and the Nasdaq Composite both turned flat on the day. Moreover, the 10-year T-bond yield, which rose as much as 1.4% earlier today, lost its traction to confirm the weakening risk-appetite.

The fall in the bond yields also weighed on the greenback and caused the US Dollar Index retreat from daily highs. As of writing, the DXY was down 0.2% on the day at 96.10. Today’s data from the U.S. showed that house prices rose 0.4% in November to match October’s reading and the Richmond Fed Manufacturing Index improved to -2 in January from -8.

Meanwhile, in a widely expected decision, the BoJ announced that it kept its policy rate unchanged. However, the bank also lowered the inflation outlook to account for lower oil prices and Governor Kuroda reiterated that the BoJ was ready to take additional measures if needed to help the inflation move toward their target.

Technical levels to consider