USD/JPY sideways with light data schedule leaning on 112.20 support

Currently, USD/JPY is trading at 112.22, up 0.02% on the day, having posted a daily high at 112.26 and low at 112.13.

While being a non-mover in the Tokyo open, USD/JPY rose from 112.10 to 112.48 overnight and remains under pressure below the 113 handle. The dollar was bid overnight and the 2yr yields were rising from 1.53% to 1.56% while the US 10yr treasury yields moved in a narrow range between 2.30% and 2.33%. Spreads remain key while the market is pricing in a Fed hike for December and the chances of a more hawkish Fed Chair. The Fed fund futures yields firming and the chance of a December rate hike now at 92%.

Wall Street backs off record peaks, closes day slightly higher

FOMC member Harker argued that the labour market had little slack nationally but there were soft patches regionally. The US data had import/export prices both higher than expected while US industrial production rose in line by 0.3% for September. Homebuilder sentiment climbed from 64 to 68 against 64 expected.

USD/JPY levels

From a technical point of view, the upward potential remains limited, according to Valeria Bednarik, chief analyst at FXStreet:

"The price seems unable to surpass a flat 100 SMA in the 4 hours chart, acting as dynamic resistance at 112.45, also the daily high. In the same chart, the RSI indicator heads higher around 55, but the Momentum remains flat around its 100 level, reflecting the limited buying interest at current levels. Nevertheless, an upward acceleration through the mentioned level should lead to a retest of 113.43, the high set this month."