USD/JPY declines below 110.30 as US Treasury bond yields turn south
- US/DJPY is posting small daily losses during the European session.
- 10-year US Treasury bond yield is down more than 1%.
- US Dollar Index stays below 93.00 ahead of consumer confidence data.
After closing the last two trading days in the negative territory, the USD/JPY pair edged lower during the European trading hours on Friday and was last seen losing 0.1% at 110.27.
In the absence of significant fundamental drivers, the more-than-1% decline witnessed in the benchmark 10-year US Treasury bond yield seems to be weighing on USD/JPY ahead of the weekend.
Later in the session, the Import Price Index, Export Price Index and the University of Michigan's Consumer Sentiment Index data will be featured in the US economic docket. Nevertheless, the pair is likely to continue to react to fluctuations in T-bond yields. Ahead of these data, the US Dollar Index is posting small daily losses at 92.92.
In the meantime, S&P Futures and Nasdaq Futures both trade flat on the day, suggesting that risk perception will not be able to provide a directional clue to USD/JPY in the second half of the day.
USD/JPY near-term outlook
OCBC analysts think that USD/JPY could continue to push higher as long as 110.00 support holds.
"The USD/-JPY pair held steady despite the broader USD advance. Near-term support remains at 110.00," analysts noted. “So long as 110.00 holds, the pair retains a positive momentum.”
Additional levels to watch for