- The USD/JPY has faded the drop to 112.35 and is now trading largely unchanged on the day at 112.57.
- The S&P 500 futures have trimmed losses, likely helping the USD/JPY regain poise.
- Technically speaking, a break above 112.73 would signal a continuation of recovery rally from the last week's low of 111.62.
At press time, the USD/JPY pair is trading largely unchanged on the day at 112.57, having hit a low of 112.35 earlier today.
The decline witnessed in early Asia was likely associated with the 0.55 percent drop in the S&P 500 futures and the resulting rise in demand for the anti-risk JPY. However, the index futures are now trading almost flat-to-positive and the turn around may have helped USD/JPY regain poise.
Looking forward, the European stocks may open on a positive note, as Moody's decision to cut Italy's credit rank by one step to Baa3 and retain "stable" outlook has likely removed an immediate threat of a downgrade to Junk.
As a result, the USD/JPY may find acceptance above key hurdle of 112.73 (high of Thursday's bearish outside-day). That would signal a continuation of the rally from the recent low of 111.62.
USD/JPY Technical Levels
Resistance: 112.73 (Thu's high), 113.00 (psychological hurdle), 113.18 (July 19 high)
Support: 112.35 (session low), 111.99 (50-day EMA), 111.62 (Oct. 15 low)
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