USD/JPY stays flat above 104.00 ahead of Wall Street's opening bell
- USD/JPY is struggling to find direction on Wednesday.
- Rising US Treasury bond yields limit USD/JPY's losses.
- US Dollar Index stays below 91.00 in early American session.
The USD/JPY pair is trading in a very tight range for the second straight day on Wednesday and continues to have a difficult time finding direction. As of writing, the pair was virtually unchanged on the day at 104.18.
USD and JPY fail to attract investors
Risk flows started to dominate financial markets mid-week amid renewed optimism about a US coronavirus stimulus bill agreement and heightened hopes for progress in EU-UK trade talks. Reflecting the risk-positive market atmosphere, major global equity indexes trade higher on Wednesday and Wall Street's main indexes remain on track to test new record highs.
However, the upbeat market mood weighs both on the JPY and the USD by dampening the safe-haven demand and forces USD/JPY stay directionless.
In the meantime, the 10-year US Treasury bond yield is up more than 2% on the day, limiting positively-correlated USD/JPY's upside. On the other hand, the US Dollar Index is losing 0.15% at 90.83 to mirror the broad-based selling pressure surrounding the greenback.
In the early trading hours of the Asian session, the Producer Price Index (PPI) and the BSI Large Manufacturing Conditions Index will be featured in the Japanese economic docket but are unlikely to trigger a significant market reaction.
Technical levels to watch for