The USD/JPY pair held on to its recovery gains and is now approaching session high level following the release of US economic data.
Currently trading around 103.75-80 region, the pair intially had a muted reaction to mixed US economic data released just a short-while ago. Thursday’s US data showed Philly Fed Manufacturing Index for October retraced to 91.7 in October from 12.8 (highest since Feb. 2015) recorded in September, albeit was better-than 5.3 expected. Meanwhile, initial jobless claims rose more-than-anticipated to 260K, up from previous week's 247K and expected 250K.
The pair, however, picked-up momentum as the ECB presser got underway. Meanwhile, the momentum lacked conviction as the prevalent cautious investor sentiment around European equity market is seen extending support to the Japanese Yen's safe-haven appeal and restricting further upside for the major.
Later during NY session, traders will also confront the release of existing home sales data for the month of September.
Technical outlook
Slobodan Drvenica, Information & Analysis Manager at Windsor Brokers Ltd., notes, "Renewed attempt below key 103.50 support (daily cloud top) was contained at 103.15 and today’s fresh strength emerged above the cloud again, offsetting for now bearish signal on yesterday’s close below cloud top. However, near-term gains show initial signs of stall, as rally is so far unable to clear daily Tenkan-sen barrier at 103.70. While the latter holds, expect fresh attacks at daily cloud top, with renewed attempts below it, to signal that correction from 104.62 peak is not over yet."
"Scenario of extended dips is still in play, with extension below 103.15, expected to find solid support at 102.85 (Fibo 38.2% of 100.05/104.62 rally) to keep overall bulls in play. Conversely, sustained break above daily Tenkan-sen will signal reversal from 103.15 higher low and shift near-term focus higher."
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