• Bearish pressure on US T-bond yields weakens on Wednesday.
• US Dollar Index climbs above 98.70 ahead of mid-tier data.
• Wall Street looks to open the day modestly lower.

The USD/JPY pair slumped to its lowest level in two weeks at 106.96 on Tuesday as the JPY gathered strength amid risk-off flows but reversed its direction today on the back of broad-based USD strength. As of writing, the pair was trading at 107.40, adding 0.32% on a daily basis.

DXY rebounds on Wednesday

The heavy selling pressure surrounding major European currencies such as the GBP and the EUR on Wednesday seems to be ramping up the demand for the Greenback and helping the pair float in the positive territory. The US Dollar Index (DXY), which lost 0.3% on Tuesday, is now up 0.43% on a daily basis at 98.76. The only data from the US will be the new home sales. FOMC members Brainard and George will be delivering speeches later in the day as well.

Additionally, the bearish pressure on the 10-year US Treasury bond yield seems to have eased today to allow the USD valuation to drive the pair. After losing nearly 5% since the start of the week, the 10-year T-bond yield is down only 0.6% on the day.

Meanwhile, major equity indexes in the US look to open the day modestly lower, which could cause the markets to turn risk-averse in the second half of the day and cause the pair to lose its traction. At the moment, the S&P 500 Futures is down 0.2%.

Technical levels to watch for