USD/JPY consolidates gains near two-week highs at 109.00
- USD/JPY is rising for the third straight day on Wednesday.
- 10-year US Treasury bond yield is up nearly 5% since the beginning of the week.
- Focus shifts to low-tier US data and FOMC's policy announcements.
The USD/JPY pair closed the first two days of the week in the positive territory and preserved its bullish momentum to touch the highest level in two weeks at 109.08. As of writing, the pair was up 0.28% on a daily basis at 108.98.
USD/JPY pushes higher on rising US T-bond yields
In the absence of significant macroeconomic data releases, the US Treasury bond yields' performance continues to drive USD/JPY's movements. The benchmark 10-year US T-bond yield rose more than 3% on Tuesday and is currently gaining 1% at 1.641%.
Reflecting the positive impact of rising US T-bond yields on the greenback, the US Dollar Index is up 0.2% at 91.06.
Later in the session, Wholesale Inventories and Goods Trade Balance data will be featured in the US economic docket. More importantly, the FOMC will release the Monetary Policy Statement and Interest Rate Decision following the two-day meeting.
Previewing this event, "we don’t expect any substantive new signal yet on tapering – or tightening – even as the tone on the economy is more positive than in March," said TD Securities analysts. "We expect the signalling to evolve over time as the recovery proceeds, and we just changed our forecast for the start of tapering to March 2022 from September 2022 but we expect officials will be reluctant to say anything that could be construed as a tapering countdown signal until much later this year."
Federal Reserve Preview: Forecast from 12 major banks.
Technical levels to watch for