- USD/JPY erased its daily gains during European hours.
- The dollar struggles to find demand as US stocks rise.
- The focus is on the 10-year Treasury bond auction.
The pair USD/JPY picked up bullish momentum earlier in the week and rallied to the 143.50 area before reversing direction during European hours. At the time of writing this article, the pair was trading at the 142.50 zone, where it has been virtually unchanged on the day.
The risk-on environment in the market during the Asian session made it difficult for the yen to find demand. Japanese Deputy Cabinet Secretary Seiji Kihara reiterated that the government will take necessary measures to counteract the yen’s excessive decline, but the pair did not show any reaction to these comments.
In European morning trading, the dollar came under heavy selling pressure amid falling US Treasury yields and caused USD/JPY to turn south.
The dollar index, which tracks the dollar against a basket of six major currencies, last lost 0.7% on the day to settle at 108.22. Meanwhile, all three major Wall Street indices are up more than 1% after the opening bell, keeping the dollar from rallying.
In the absence of any big-hitting macroeconomic data releases, investors will be paying close attention to the outcome of the 10-year US Treasury bond auction due to take place at 17:00 GMT. Should the high yield fall below the previous auction’s 2.755%, the 10-year US Treasury yield could be stretched lower and open the door for additional USD/USD losses. JPY.
Technical levels
Source: Fx Street
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