USD/JPY inching higher, rises to session high near 111.70

The USD/JPY pair gained some traction during Asian session on Thursday and eroded majority of overnight sharp retracement losses from one-week highs.

Minutes from the Federal Reserve’s latest monetary policy meeting, released during the NY session on Wednesday, disappointed investors as there was nothing news to provide any clues over the timing of future Fed rate-hikes and triggered a sharp slide in the US treasury bond yields. Sliding US bond yields did little to provide an additional boost the US Dollar's early recovery move. 

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As markets digested the latest view of the Fed, the prevalent risk-on environment was seen weighing on the Japanese Yen's safe-haven appeal and helped the pair to recover majority of Wednesday's lost ground. 

Meanwhile, the pair had a little reaction to BOJ board member Sakurai's comments that inflationary pressure likely to heighten in Japan, with broader market risk sentiment supporting tepid gains back to 111.65-70 region.

Today's US economic docket features the release of trade balance, wholesale inventories and weekly jobless claims, and would be looked upon for some trading impetus later during early NA session.

Technical levels to watch

Immediate resistance is pegged near 111.80 level, above which the pair is likely to head back towards the 112.00 handle before eventually darting towards 112.15 resistance (yesterday’s high) en-route 112.45-50 strong hurdle.

On the downside, 111.50 level now seems to act as immediate support, which if broken could accelerate the slide back towards the 111.00 handle. A follow through selling pressure has the potential to continue dragging the pair further below 110.80 horizontal support towards retesting one-month lows near 110.25 level.