USD/JPY drops to fresh daily lows near 105.80
- USD/JPY extended its daily slide after breaking below 106.00.
- Slumping US Treasury bond yields weigh on greenback on Thursday.
- US Dollar Index remains on track to close in red below 93.00.
The USD/JPY pair spent a large portion of the day moving sideways in a tight range near 106.00 but came under modest pressure during the American trading hours. After dropping to a fresh daily low of 105.76, the pair recovered modestly and was last seen losing 0.22% on the day at 105.87.
DXY turns south amid falling US T-bond yields
The sharp drop witnessed in the US Treasury bond yields on Thursday doesn't allow the USD to build on the FOMC-inspired gains. The US Dollar Index (DXY), which tracks the greenback's performance against a basket of six major currencies, recovered to 93.00 after the FOMC Minutes showed that policymakers were concerned about costs associated with yield caps and yield targets.
Nevertheless, the cautious market mood on Thursday ramped up the demand for the safe-haven US Treasury bonds. With the yield on the 10-year reference losing more than 5%, the DXY reversed its direction and was last seen losing 0.2% on the day at 92.85.
Earlier in the day, the data published by the US Department of Labor showed that Initial Jobless Claims rose above 1 million after declining to 971,000 last week. Additionally, the Philly Fed Manufacturing Index dropped from 24.1 in July to 17.2 in August.
On Friday, the National Consumer Price Index (CPI) and Jibun Bank Manufacturing PMI data will be featured in the Japanese economic docket.
Technical levels to watch for