USD/JPY climbs above 109.70 supported by rising US T-bond yields

• USD/JPY gained traction during the American trading hours.
• 10-year US Treasury bond yield is up 2% on Thursday.
• US Dollar Index continues to fluctuate in a relatively tight range.

The USD/JPY pair retreated to 109.40 area in the early American session on Thursday but managed to regain its traction. As of writing, the pair was up 0.23% on the day at 109.72.

USD/JPY capitalizes on rising US T-bond yields

The decisive rebound witnessed in the US Treasury bond yields seems to be helping USD/JPY push higher during the American trading hours. The benchmark 10-year US T-bond yield, which suffered heavy losses earlier in the week, is currently rising 2% on a daily basis.

Earlier in the day, the data from the US showed that the Initial Jobless Claims edged lower to 385,000 in the week ending July 31 from 399,000. Additionally, the US Census Bureau reported that the goods and services deficit widened to $75.7 billion in June from $71 billion in May. Nevertheless, investors largely ignored these readings and the US Dollar Index continues to move sideways around 92.20.

In the meantime, Wall Street's main indexes are up between 0.35% and 0.5% on Thursday, making it difficult for the safe-haven JPY to find demand as a safe-haven.

On Friday, the US Bureau of Labor Statistics' July labour market report will be watched closely by market participants. Previewing the Nonfarm Payrolls (NFP) data, "the greenback has room to fall only if the increase in jobs is considerably below estimates, but not catastrophic," said FXStreet analyst Yohay Elam.

Nonfarm Payrolls Preview: Why the dollar could surge in (almost) any scenario.

Technical levels to watch for