- US Dollar Index consolidates daily gains below 95.50.
- US 10-year T-bond yield falls nearly 1% on the day.
- Household spending data from Japan will be watched in the Asian session.
The USD/JPY pair rose above the 111.50 mark in the early NA session but failed to hold there as the greenback started consolidating its daily gains. As of writing, the pair was trading at 111.44, adding 0.15% on the day.
The lack of macroeconomic data releases from Japan and the U.S. allowed the pair to start recovering last Friday's losses. Despite the greenback strength, escalating concerns over the trade dispute between the United States and China weighed on the risk sentiment last week and helped the JPY remain strong against its rivals. However, with no new headlines on trade, investors shifted their focus back to the fact that the U.S. economy is performing well enough to allow the Fed to raise rates twice more this year.
Earlier in the day, the US Dollar Index rose to its highest level since July 19 at 95.52 and went into a consolidation phase. A 1% fall seen in the 10-year US T-bond yields seems to be making it difficult for the index to stretch higher as well. At the moment, the DXY is up 0.2% on the day at 95.35.
During the Asian session on Tuesday, the Ministry of Internal Affairs and Communications is going to publish the overall household spending change, which is expected to improve to -1.6%on a yearly basis in June from -3.9% in May. Although a positive reading is likely to help the JPY find demand, the market reaction is unlikely to have a significant impact on the pair's action and the greenback's market valuation could remain as the primary driver.
Technical outlook
The initial resistance for the pair aligns at 111.60 (20-DMA) ahead of 112.15 (Aug. 1 high) and 113.15 (Jul. 18 high). On the downside, supports could be seen at 110.90 (50-DMA), 110.40 (Jul. 3 low) and 110 (psychological level).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD jumps above 0.6500 after hot Australian CPI data
AUD/USD extended gains and recaptured 0.6500 in Asian trading, following the release of hotter-than-expected Australian inflation data. The Australian CPI rose 1% in QoQ in Q1 against 0.8% forecast, providing extra legs to the Australian Dollar upside.
USD/JPY hangs near 34-year high at 154.88 as intervention risks loom
USD/JPY is sitting at a multi-decade high of 154.88 reached on Tuesday. Traders refrain from placing fresh bets on the pair as Japan's FX intervention risks loom. Broad US Dollar weakness also caps the upside in the major. US Durable Goods data are next on tap.
Gold price cautious despite weaker US Dollar and falling US yields
Gold retreats modestly after failing to sustain gains despite fall in US Treasury yields, weaker US Dollar. XAU/USD struggles to capitalize following release of weaker-than-expected S&P Global PMIs, fueling speculation about potential Fed rate cuts.
Ethereum ETF issuers not giving up fight, expert says as Grayscale files S3 prospectus
Ethereum exchange-traded funds theme gained steam after the landmark approval of multiple BTC ETFs in January. However, the campaign for approval of this investment alternative continues, with evidence of ongoing back and forth between prospective issuers and the US SEC.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Fed might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.