USD/JPY goes into consolidation after rising to fresh monthly high at 110.81
- USD/JPY extended its rally during the European session on Wednesday.
- 10-year US Treasury bond yield is rising for the sixth straight day.
- US Dollar Index stays afloat in the positive territory above 93.00.
The USD/JPY pair closed in the positive territory on Tuesday and pushed higher on Wednesday. After reaching its highest level since early July at 110.81, the pair seems to have gone into a consolidation phase and was last seen posting small daily gains at 110.70.
Eyes on US inflation data, T-bond yields' reaction
Rising US Treasury bond yields help USD/JPY preserve its bullish momentum since the beginning of the week. The benchmark 10-year US Treasury bond yield, which rose 14% in the previous five trading days, is currently trading at its strongest level since mid-July at 1.368%, up 1.2% on a daily basis.
Moreover, the USD continues to outperform its major rivals with the US Dollar Index clinging to modest gains near 93.20. Later in the session, the US Bureau of Labor Statistics Consumer Price Index (CPI) data will be watched closely by market participants.
Investors expect the Core CPI to edge lower to 4.3% in July from 4.5% in June. A softer-than-expected inflation reading could limit USD/JPY upside. On the other hand, a strong print is likely to fuel T-bond yields' upside and allow USD/JPY to advance toward 111.00.
Technical levels to watch for
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
