USD/JPY stays under pressure near mid-112s as DXY struggles to recover above 93
The heavy sell-off witnessed in major global equity indexes on Thursday help the traditional safe-haven JPY gather strength against its peers. After dropping to a fresh daily low at 112.30, the USD/JPY is struggling to make a meaningful recovery and was last seen trading at 112.49, down 0.4% on the day.
Amid the ongoing political drama in Spain, disappointing third-quarter earnings results from big corporations and falling crude oil prices, European equity indexes spent the day under pressure and weighed on the Wall Street. As of writing, the Dow Jones Industrial Average and the S&P 500 are losing 0.3% and 0.4% respectively.
- US stocks follow European counterparts lower
Meanwhile, despite the upbeat data from the U.S., the greenback is suffering losses against its peers as the risk-off mood weighs on the Treasury-bond yields. After closing the day nearly 2% higher, the 10-year T-bond yield is losing 1.5% right now while the US Dollar Index is down 0.3% at 93.
- US: Weekly initial claims was 222,000, a decrease of 22,000 from previous week
- Philly Fed: Manufacturing firms reported continued growth in October
On Friday, the Bank of Japan Governor Kuroda is going to be delivering a speech in the early European trading hours. Later in the day, the economic docket in the U.S. will feature existing home sales data. However, the market sentiment and the DXY movements are likely to drive the pair's price action.
Technical outlook
The immediate support for the pair aligns at 112 (psychological level) ahead of 111.40 (200-DMA) and 110.75 (100-WMA). On the upside, resistances could be seen at 113.10 (daily high), 113.45 (Oct. 10 high) and 114 (psychological level). With today's retreat, the RSI indicator on the daily graph turned lower toward the 50 mark, suggesting that the bullish momentum is losing strength.
- USD/JPY seen at 115.00 in 6-month – Danske Bank