USD/JPY erases early gains, looks to close flat near 110.20
- USD/JPY lost its traction after rising toward 110.50.
- US Dollar Index remains on track to close third straight day in the positive territory.
- 10-year US Treasury bond yield is losing more than 3%.
The USD/JPY pair preserved its bullish momentum at the start of the day and reached its strongest level in a week at 110.45. In the second half of the day, however, the pair lost its traction and was last seen posting small daily losses at 110.20.
Falling US T-bond yields cap USD/JPY's upside
The broad-based USD strength provided a boost to USD/JPY earlier in the day. The US Dollar Index, which closed the first two days of the week in the positive territory, extended its recovery to 92.86 on Wednesday. Nevertheless, the sharp decline witnessed in the US Treasury bond yields caused the pair to reverse its direction. Currently, the benchmark 10-year US T-bond yield is losing more than 3% on the day.
The data from the US showed on Wednesday that JOLTS Job Openings rose to a new record high of 10.9 million in July. On a negative note, the IBD/TIPP Economic Optimism Index dropped to its weakest level of 2021 at 48.5.
Meanwhile, the Federal Reserve's Beige Book showed that the economic growth lost some momentum from early July through August. The publication further revealed that several districts indicated that businesses anticipate significant hikes in their selling prices in the months ahead.
On Thursday, Foreign Investment in Japan Stocks and August Machinery Orders data will be featured in the Japanese economic docket, which are likely to be ignored by market participants.
Technical levels to watch for