USD/JPY struggles to break above 109 ahead of key FOMC announcements
- 10-year US T-bond yield climbs to multi-week highs on Wednesday.
- US Dollar Index makes a technical correction, drops below 97.50.
- FOMC Chairman Powell till testify before Congress, FOMC will release meeting minutes.
Ahead of the day's key events, the USD/JPY pair is moving sideways in an extremely tight range below the 109 mark. As of writing, the pair was up 0.05% on a daily basis at 108.90.
Since the start of the week, the broad USD strength and rising US Treasury bond yields allowed the pair to push higher. The yield on the 10-year reference, which dropped to its lowest level since November 2016 last week, gained nearly 10% in the last 5 trading days and rose above 2.1% mark. On the other hand, after touching its highest level in three weeks at 97.60 yesterday, the US Dollar Index is posting small losses today as investors are staying on the sidelines while waiting for FOMC Chairman to testify before the Congress and the FOMC to publish the minutes of its June meeting.
Previewing the FOMC event, "We look for discussions regarding the risks to the economic expansion (crosscurrents) and a characterization of the inflation outlook given the revisions to the downside for those projections," said TD Securities analysts.
"We also expect the minutes to expand on the decision adopted by some Fed officials to lower their long-run rate projections (the median now stands 25bp lower at 2.50%).”
Technical levels to watch for