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  • 10-year US Treasury rebounds from all-time lows, still down more than 3%.
  • CME Group FedWatch shows a 70% probability of a rate cut in March.
  • US Dollar Index goes into consolidation above 98.50.

The USD/JPY pair touched its lowest level since February 18th at 109.70 in the early trading hours of the American session but staged a modest rebound in the last hour. As of writing, the pair was down 0.25% on the day at 110.15.

USD remains on the back foot

The intense flight-to-safety caused the US Treasury bond yields to continue to push lower on Thursday and weighed on the greenback while ramping up the demand for the safe-haven JPY.

The 10-year US T-bond yield renewed its all-time low for the third straight day and dragged the US Dollar Index to its worst level in three weeks at 98.36. With today’s market action, the CME Group FedWatch Tool’s probability for a 25 bps rate cut in March jumped to 70% from 33.2% on Wednesday.

Although the 10-year T-bond yield retraced a large portion of its daily fall to help the pair recover above 110, it’s still down 3% on the day and the US Dollar Index is erasing 0.5% at 98.65.

Earlier today, the US Burea of Economic Analysis in its second estimate kept the annualized GDP growth for the fourth quarter steady at 2.1%. Other data from the US showed that Durable Goods Orders in January declined 0.2% to better the market expectation for a fall of 1.5%.

During the Asian session on Friday, Retail Trade and Industrial Production data from Japan will be looked upon for fresh impetus.  

Technical levels to watch for