USD/JPY fails to break above 109.00, looks to post modest daily gains

• USD/JPY remains on track to finish the day in the positive territory.
• US Dollar Index holds steady around 92.50 on Wednesday.
• 10-year US Treasury bond yield erases early recovery gains.

After spending the majority of the day in a relatively tight range, the USD/JPY pair gained traction in the early American session and touched a daily high of 108.96. Nevertheless, the pair lost its bullish momentum in the last hours and erased a portion of its daily gains. As of writing, USD/JPY was up 0.15% on the day at 108.72.

DXY steadies around mid-92.00s 

Following a two-day decline, during which it lost nearly 5%, the benchmark 10-year US Treasury bond yield staged a rebound and rose as much as 1% on Wednesday. The USD capitalized on the rising T-bond yields and the US Dollar Index (DXY) advanced to a fresh multi-month high of 92.60. In the absence of significant fundamental drivers, however, the 10-year T-bond yield turned negative on the day in the late American session and caused the DXY to go into a consolidation phase. At the moment, the DXY is up 0.19% at 92.50.

The data from the US showed on Wednesday that Durable Goods Orders in February declined by 1.1%. On a positive note, the IHS Markit's preliminary PMI reports revealed that the business activity in the manufacturing and the service sectors continued to expand at a strong pace.

Earlier in the day, Bank of Japan (BOJ) Governor Haruhiko Kuroda reiterated that monetary easing will stay for a long while and added that it will take time for them to reach the 2% inflation target.

There won't be any significant macroeconomic data releases from Japan on Thursday. Investors will be keeping a close eye on the US Bureau of Economic Analysis' final estimate of the fourth-quarter GDP growth and the weekly Initial Jobless Claims data.

Technical levels to watch for