USD/JPY knocks into 110.50 as market stretches recovery into Thursday

  • Market sentiment continues to improve, sending the Dollar higher against the safe haven Yen.
  • Thin schedule for Thursday sees risk appetite driving the pair solo.

The USD/JPY has continued to recover in Thursday's Asia trading, lifting into 110.50 as market sentiment continues to favor the Greenback and risk flows from the early week begin to reverse.

US Treasury yields recovered on Wednesday, stabilizing the US Dollar and pushing the pair higher into Thursday. Little of note is on the economic calendar for Japan for Thursday, though National CPI figures will be dropping late at 23:30 GMT. The headline figure is expected to contract from 0.6% to 0.3%, though Tokyo CPI releases several weeks earlier, so traders are prepared for the reading.

On the US side will be Jobless Claims dropping at 12:30 GMT, with initial claims expected to tick up slightly from 218 thousand to 220 thousand. 

USD/JPY levels to watch

As noted by FXStreet's Valeria Bednarik, "according to the 4 hours chart, the upside potential is limited, as technical indicators hold below their mid-lines with modest upward slopes, indicating no buying interest. The pair is resting above directionless 100 and 200 moving averages, which converge around 109.85, providing a short-term support."

Support levels: 110.15 109.85 109.55    

Resistance levels: 110.45 110.90 111.34

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