USD/JPY stays on track to record its highest daily close in 2-months near 112.50

Despite the broad-based USD sell-off on Thursday, the USD/JPY pair gained traction as the safe-haven JPY struggled to find demand in the risk-positive environment in the NA session. After touching a fresh 2-month high at 112.58, the pair went into a consolidation phase and was last seen trading at 112.51, where it was up 0.2% on the day.

Earlier today, a sharp upsurge seen in the GBP/USD and the EUR/USD pairs weighed on the greenback and dragged the US Dollar Index to its lowest level since early July at 93.83. Although the weekly jobless claims and the Philly Fed Manufacturing Index figures bettered the market expectations, the index struggled to make a decisive recovery and is now looking to close the day with a 0.6% loss near 94.

On the other hand, easing trade war fears continued to boost risk-sensitive stock markets and the Dow Jones Industrial Average reached a record high before retreating slightly. At the moment, the DJIA and the S&P 500 were up 0.9% and 0.7%, respectively.

Meanwhile, as expected, Japan's Prime Minister Shinzo Abe has been re-elected as the head of the ruling party to become the longest-serving party leader in the history of the country. The market reaction, however, was limited to this development.

In the early trading hours of the Asian session, Nikkei Manufacturing PMI and All Industry Activity Index from Japan will be looked upon for fresh impetus.

Technical levels to consider

The initial resistance for the pair could be seen at 113.15 (Jul. 19 high), 113.60 (Dec. 21 high) and 114.40 (Nov. 3, 2017, low). On the downside, supports align at 112 (psychological level), 111.50 (20-DMA) and 110.85 (100-DMA).