USD/JPY retreats from highs, back around 110.10

After advancing to fresh daily tops near 110.30, USD/JPY met fresh sellers and is now returning to the 110.15/10 band.

USD/JPY finds support near 109.90

The pair keeps the upbeat tone on Tuesday, reverting part of Monday’s loses to the vicinity of 109.50 amidst the continuation of the up trend in US 10-year yields. In fact, yields of the 10-year reference are up for the fifth session in a row today, retaking the 2.22% area.

Spot stays within a narrow range as the cautious tone seems to prevail among investors in light of the FOMC meeting due tomorrow.

Market expectations continue to lean towards a 25 bp rate hike tomorrow, although the start of the reduction of the Fed’s balance sheet and the ability of the Fed to deliver another rate hike in the next months will likely be in centre stage.

In the Japanese docket, the BoJ is expected to leave its monetary conditions unchanged at Friday’s meeting.

USD/JPY levels to consider

As of writing the pair is up 0.12% at 110.08 facing the next hurdle at 110.34 (23.6% Fibo of the May-June drop) followed by 110.56 (200-day sma) and finally 110.73 (high Jun.5). On the other hand, a breakdown of 109.60 (low Jun.12) would open the door to 109.36 (low Jun.8) and then 109.09 (low Jun.7).