USD/JPY slumps to April lows below 111 pressured by falling US T-bond yields

• 10-year US T-bond yield loses around 1% on Wednesday.
• US Dollar Index fails to hold above the 97 mark.
• Coming up: FOMC meeting minutes.

After spending the majority of the day in a tight range above the 111 mark, the USD/JPY came under a renewed pressure in the second half of the day and dropped to its lowest level of April at 110.89. As of writing, the pair was trading at 110.91, erasing 0.2% on a daily basis.

The sharp drop witnessed in the US T-bond yields today seems to be weighing on the positively-correlated pair on Wednesday. The 10-year reference is losing more than 1% today, pointing out to a sour market mood that ramps up the demand for safe-havens. 

The ECB's cautious policy stance in today's policy statement and Draghi's comments about financing conditions, labour market, wage growth underpinning economic growth reminded markets of concerns about the global economic slowdown. Later in the session, the FOMC will be publishing the minutes of its last meeting and if the statement confirms a dovish monetary policy outlook, we may see the 10-year yield extend its slide and drag the pair even lower. 

Meanwhile, today's data from the U.S. revealed that the Consumer Price Index rose 0.4% and 1.9% on a monthly and yearly basis, respectively, to beat analysts' estimates. However, the core CPI reading, which excludes volatile food and energy prices, came in slightly below the market expectation. The US Dollar Index, which recovered above the 97 handle at the beginning of the NA session, was last down 0.07% on the day at 96.95.

Technical outlook

The pair could face the initial support at 110.40 (100-DMA) ahead of 110 (psychological level) and 109.70 (Mar. 25 low). On the upside, resistances align at 111.00 (50-DMA), 111.50 (200-DMA) and 111.85 (Apr. 5 high).