USD/JPY Forecast: Risks drop toward 110.00 if 10-yr treasury yield falls below 2.59 percent


USD/JPY could drop to 110.00 in the near-term if the 10-year treasury yield falls below the previous day's low of 2.594 percent. 

The benchmark yield fell seven basis points from 2.67 percent yesterday, forming a bearish outside-day candle. The drop in yields was likely a result of below-forecast US consumer price inflation validating Fed's patience on further rate hikes. 

A close today below 2.594 percent would reinforce bearish continuation signaled by yesterday's outside-reversal candle and open the doors for a deeper drop toward the recent low of 2.54 percent. 

Put simply, the dollar could take a beating if the 10-year yield slides below 2.294 percent. That could happen if the US February durable goods orders data, scheduled for release at 12:30 GMT, prints below estimates. 

Technically speaking, 111.11 and 111.46 are the levels to watch out for in the USD/JPY pair. 

A break below 111.11 would revive the bearish view put forward by the rising wedge breakdown on the hourly chart, as discussed earlier today. The pair could then challenge the previous week's low of 110.75. 

On the higher side, 111.46 - the high of the rising wedge - needs to be breached to strengthen the bull grip. 

US 10-year treasury yield

USD/JPY hourly chart

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