USD/JPY tests 110.00 supported by rising US T-bond yields

• USD/JPY is edging higher after posting small gains on Monday.
• 10-year US Treasury bond yield is up more than 2%.
• US stocks look to open little changed after long weekend.

The USD/JPY pair managed to post small gains on Monday and continued to push higher ahead of the American session on Tuesday. As of writing, the pair was up 0.18% on a daily basis at 109.98.

Rising US T-bond yields lift USD/JPY

Rising US Treasury bond yields seem to be helping USD/JPY stay in the positive territory on Tuesday. Currently, the benchmark 10-year US T-bond yield is sitting at its highest level in more than 10 days at 1.366, rising 2.1% on the day. Additionally, the US Dollar Index is clinging to modest daily gains at 92.30.

There won't be any high-tier data releases featured in the US economic docket and the pair is likely to continue to react to fluctuations in the US T-bond yields.

Meanwhile, the US stock index futures are trading flat on the day, suggesting that the risk perception will not be able to provide a directional clue in the second half of the day.

Earlier in the day, the data from Japan showed that the Labor Cash Earnings increase by 1% on a yearly basis in July while the Leading Economic Index declined to 104.1 from 104.6 in June. On Tuesday, Japan's Cabinet Office will release the second-quarter GDP data, which is expected to show a growth of 0.4% on a quarterly basis.

Technical levels to watch for