USD/JPY struggles to rise above 108, trades in tight daily range
- US Dollar Index extends consolidation below the 97 mark.
- 10-year US Treasury bond yield clings to last week's gains.
- Subdued trading action is likely to continue on Monday.
After closing the previous week with a loss of nearly 50 pips, the USD/JPY pair started the new week in a relatively calm manner and has been moving in a relatively tight range below the 108 mark. As of writing, the pair was trading at 107.84, losing 0.05% on a daily basis.
The broad-based USD weakness last week didn't allow the pair to turn north. On the other hand, however, the strong rebound witnessed in the 10-year US Treasury bond yield, which generally shows a strong correlation with USD/JPY, helped the pair limit its losses.
On Monday, the US Dollar Index is moving sideways below the 97 handle, consolidating the losses it suffered following FOMC Chairman Powell's cautious remarks about the economic outlook last Wednesday during his semi-annual testimony before the Congress. At the moment, the US Dollar Index is posting modest daily gains at 96.75. Meanwhile, the 10-year T-bond yield is moving sideways above the 2.1% handle, preserving its recent gains and keeping the pair's losses in check.
In the second half of the day, the Federal Reserve Bank of New York Empire State Manufacturing Survey will be looked upon for fresh impetus. NY Fed President Williams is scheduled to deliver a speech as well.
Technical levels to watch for