- USD/JPY goes into consolidation around 110.50 on Wednesday.
- US Dollar Index stays in the negative territory around 92.60.
- Focus shifts to FOMC Chairman Jerome Powell's testimony.
The USD/JPY pair closed the previous three trading days in the positive territory and touched its highest level in a week at 110.71 in the early Asian trading hours on Wednesday. However, the pair lost its bullish momentum ahead of the American session and was last seen posting small daily losses at 110.50.
DXY edges lower, eyes on Powell's testimony
On Tuesday, the benchmark 10-year US Treasury bond yield gained nearly 4% following the dismal 30-year note auction and helped USD/JPY push higher. Moreover, the June inflation report, which showed that the annual Consumer Price Index (CPI) jumped to 5.4% from 5%, provided an additional boost to the greenback. The US Dollar Index (DXY) rose 0.6% on a daily basis and posted its largest percentage gain since mid-June.
On Wednesday, the DXY is trading with modest losses around 92.60 as investors stay on the sidelines ahead of key events. Meanwhile, the 10-year US T-bond yield is down nearly 2%, making it difficult for USD/JPY to gain traction.
The US Bureau of Labor Statistics will release the Producer Price Index (PPI) data for June. More importantly, FOMC Chairman Jerome Powell will start the two-day presentation of the US Federal Reserve's semiannual report to Congress.
Powell Preview: Three reasons to expect the Fed Chair to down the dollar.
Technical levels to watch for
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