• Rebound seen in the US T-bond yields boosts USD/JPY this week.
  • US Dollar Index continues to move sideways near 98.
  • FOMC is expected to reiterate its patient stance in May meeting minutes.

Supported by the strong rally witnessed in the major equity indexes and the ongoing recovery in the 10-year US Treasury bond yield on Tuesday, the USD/JPY pair climbed to its highest level in two weeks at 110.67. However, with the trading action in the FX space turning subdued ahead of the key FOMC event later today, the pair has struggled to build on its latest upsurge and gone into a consolidation stage below mid-110s. As of writing, the pair was down 0.12% on a daily basis at 110.37.

Earlier in the Asian session, the data published from Japan showed that machinery orders increased by 3.8% on a monthly basis in March to beat the market expectation for a decline of 0.7% by a wide margin but didn't receive a significant reaction from the market.

Later today, the FOMC will release the minutes of its May meeting. Although the minutes won't include any comments on the escalated trade dispute with China as the May meeting had taken place before President Trump started tweeting, investors will be paying close attention to remarks on the inflation outlook. During the press conference earlier this month, Chair Powell essentially disregarded soft inflation and argued that it was temporary to adopt a hawkish tone and provide a boost to the greenback. Additionally, the reasoning behind the IOER cut is likely to become more clear in today's publication.

FOMC Minutes Preview: Major Banks expectations from meeting minutes

Technical levels to watch for