USD/JPY: correcting towards 112.80 key resistance

Currently, USD/JPY is trading at 112.64, up 0.09% on the day, having posted a daily high at 112.71 and low at 112.51.

USD/JPY fell from 113.13 to 112.30 on a flight to safe havens overnight. USD/JPY has since been correcting the drop.

Overnight, the US 10yr treasury yields fell from 2.34% to 2.30% but later rebounded to 2.33%, and 2yr yields fell from 1.56% to 1.53% before rebounding to 1.55%.  The US dollar index was closing down 0.2% while the Fed fund futures yields slipped, now pricing the chance of a December rate hike at 87%.

For the US data, US jobless claims dropped to a 44-year low, to 222k vs 240k expected. Also, the Philadelphia Fed’s business survey rose from 23.8 to 27.9 vs 22.0 expected.  Elsewhere, while the market tracks the odds for the who will be the next Fed chair, Fed's Powell holds onto a large lead on the betting sites - Yellen/Warsh/Taylor all around the same odds. 

USD/JPY levels

Analysts at Commerzbank noted that USD/JPY’s correction lower probably ended along the 200 day ma at 111.76, a fall through which would leave the 55 day ma at 110.87 exposed:

"While above here it will remain well placed for a recovery from a slightly longer term perspective. Above the 113.44 current October high will trigger further gains to the top of the range at 114.38/49. It is where the May and July highs were made."

Meanwhile, Jim Langlands at FX Charts explained that "on the topside, resistance will be seen at 113.00, above which, 113.20 would be decent resistance. Above there, unlikely today, 113.43 (6 Oct high), 114.00 and 114.49 (11 July high) would eventually beckon. The dailies rather uncertain of any potential upside momentum, and on the downside, support today should arrive at the session low at around 112.30, below which, the 18 Oct low was at 112.12. Back below 112.00, good support would be at 111.60/70. Buying dips is still preferred near 112.10/30 although further out, with the dailies looking less positive, further range trade near current levels may be in store."