USD/JPY continues to be under pressure as US yields sink lower. The benchmark 10 years is at 2.20% as the market increasingly begins to doubt the fact that the Fed will hike rates any further beyond the 25bp factored in for tomorrow’s rate hike.

Despite the generally hawkish posture of US monetary officials, US data has been woefully disappointing and the much-vaunted rebound in second half of 2017 is nowhere to be seen as growth continues to track at about 2% rate. The end result is that market expectations have gradually declined from 4 rates hikes this year to 3 to now only 2. The Fed funds futures project only a 42% chance of any additional rate hikes beyond the June hike expected this week.

Meanwhile, technically the pair is making a series of lower highs and could target a move towards 108.50 if the news tomorrow is dovish