USD/JPY drops to 108 area as DXY continues to erase daily gains

• Consumer Confidence Index in US fell less than expected in March.
• 10-year US Treasury bond yield is down more than 7% on Tuesday.
• Wall Street's main indexes turn positive after opening red. 

The USD/JPY lost its traction in the early American session and continued to erase its daily gains. As of writing, the pair was still up 0.2% on the day at 108.03.

Coronavirus crisis takes a toll on US consumer sentiment

The monthly data published by the Conference Board on Tuesday revealed that the Consumer Confidence Index in the US dropped to 120 in March from 132.6 in February. Although this reading came in better than the market expectation of 110, the 10-year US Treasury bond yield extended its slide and was last down 7.5% on the day.

Commenting on the data, "the intensification of COVID-19 and extreme volatility in the financial markets have increased uncertainty about the outlook for the economy and jobs,” noted Lynn Franco, Senior Director of Economic Indicators at The Conference Board.

Pressured by the falling T-bond yields, the US Dollar Index (DXY), which touched a daily high of 99.95, continued to edge lower to keep the bearish pressure on the pair intact. At the moment, the DXY is still up 0.35% at 99.38.

On the other hand, Wall Street's main indexes turned positive on the day after opening deep in the red to reflect a mixed market sentiment, which might be helping the pair limit its losses for the time being.

In the Asian session on Wednesday, Tankan Large Manufacturing Index for the first quarter and Jibun Bank Manufacturing PMI for March will be looked upon for fresh impetus. 

Technical levels to watch for