The USD/JPY pair stayed relatively quiet below 110.00 in the first half of the day but gathered bullish momentum during the American session. As of writing, the pair was up 0.42% on the day at 110.31.
USD/JPY capitalizes on rallying bond yields
The positive shift witnessed in market sentiment fueled USD/JPY's upside on Wednesday as the safe-haven JPY struggled to find demand. Although the greenback also had a difficult time preserving its strength, the sharp upsurge seen in the US Treasury bond yields provided an additional boost to the positively-correlated USD/JPY.
Currently, the benchmark 10-year US T-bond yield is rising 5.3% on the day at 1.228% and the S&P 500 Index is up 0.5% at 4,344.
On the other hand, the US Dollar Index, which managed to post gains in the previous four trading days, is down 0.2% at 92.79.
USD/JPY is likely to move sideways during the Asian session on Thursday due to the Marine Day holiday in Japan. Later in the day, June Existing Home Sales and the weekly Initial Jobless Claims data will be featured in the US economic docket.
Nevertheless, the risk perception is likely to continue to have a significant impact on USD/JPY's movements ahead of the weekend.
Technical levels to watch for
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