USD/JPY moves off lows as USD strengthens

The yen remains among the strongest currencies on Thursday but against the US Dollar, it erased most of the gains. USD/JPY rose back above 112.50.

USD/JPY finds support at 112.40

The pair started to decline during the Asian session at a slow pace. It bottomed at 112.40 and then, turned to the upside. During the last hour rose to 112.72, boosted by a rally of the greenback. 

The Dollar Index climbed from 93.25 and it trading at 2-day highs at 93.71. It is testing the weekly top. The US dollar gained strength on the back of rising Treasury yields following US data and comments from Federal Reserve officials. 

Today’s reports suggested that the negative effects of the hurricanes on economic growth were limited. Initial jobless claims decreased by 12K to 260K (against 265K expected), the trade deficit narrowed August amid rising exports and factory orders rose 1.2% (vs 1.0%). Two FOMC members, Williams and Harker spoke today signaling support for another rate hike before the year-end.

US: Weekly initial claims was 260,000, a decrease of 12,000 from previous week

Fed's Williams: Expects gradual rate hikes

US: Goods & services deficit was $42.4 bln in Aug, down $1.2 billion from $43.6 billion in July

Technical levels 

The pair is moving with a bearish bias but remains inside the range of the previous days. To the upside, resistance levels might be located at 112.75 and 112.90/95 (Oct 4 & 5 high) before the key area of 113.20. On the flip side, immediate support is seen at 112.30 (daily low) followed by 112.20 (Sep 29 low) and 111.85 (Sep 19 high).