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  • 10-year US T-bond yield erases more than 2% on Tuesday.
  • Wall Street looks to open modestly higher following Monday’s rally.
  • US Dollar Index fails to hold above 98 as attention turns to US data.

The USD/JPY pair capitalized on the recovering risk sentiment on Monday and gained more than 100 pips after touching its lowest level since November 2016 at 104.86. However, the pair failed to hold above the 106 mark and is now posting daily losses with the safe-haven JPY finding demand amid falling US Treasury bond yields. As of writing, the pair was down 0.3% on the day at 105.80.

Mixed market sentiment

On Monday, US President Trump voiced his support for China’s call to resolve the trade conflict through “calm” negotiations and revived hopes of the trade conflict coming to an end before escalating further. The 10-year US Treasury bond yield rose nearly 2% and all three main indexes of Wall Street recovered decisively to end the day with gains of more than 1%.  

Although there were no major developments surrounding the US-China trade dispute, the T-bond yields failed to push higher. However, the fact that major European equity indexes are posting strong daily gains today suggests that investors are not seeking refuge. If we see similar action in Wall Street, the pair could make a fresh recovery attempt in the second half of the day. At the moment, the S&P 500 Futures is up 0.35%.  

Later in the session, the Conference Board’s Consumer Confidence Index, Richmond Fed Manufacturing Index and the Federal Housing Finance Agency’s (FHFA) Housing Price Index will be looked upon for fresh impetus.

Technical levels to watch for