USD/JPY steadies below 110.00 despite broad-based USD strength
- USD/JPY lost its traction after rising to fresh six-day highs.
- US Dollar Index clings to daily gains near 2021-highs
- Flight to safety helps JPY stay resilient against its major rivals.
The USD/JPY pair rose to its highest level in nearly a week at 110.22 on Thursday but struggled to preserve its bullish momentum. As of writing, the pair was virtually unchanged on a daily basis at 109.72.
Falling US T-bond yields, risk-aversion support JPY
The sharp decline witnessed in major European equity indexes allowed the JPY to find demand and on Thursday. Reflecting the risk-averse market environment, Wall Street's main indexes started the day in the negative territory and were last seen losing around 0.5% on the day.
On the other hand, the US Dollar Index (DXY) continues to push higher as the FOMC's July meeting minutes failed to change investors' expectations for the Fed to start asset tapering before the end of the year. Currently, the DXY is at its strongest level since November at 93.50, rising 0.37%.
Earlier in the day, the data from the US showed that the Initial Jobless Claims declined to the lowest level since March 2020 at 348,000 in the week ending August 14. This reading came in better than the market expectation of 363,000 but had little to no impact on market sentiment.
In the meantime, the 10-year US Treasury bond yield is down 1.1%, making it difficult for USD/JPY to capitalize on USD strength.
On Friday, National Consumer Price Index data for July will be featured in the Japanese economic docket.
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.
