USD/JPY heads towards 113.00 amid notable USD demand

The USD bulls took a breather from the Asian upswing, prompting a brief consolidation phase in USD/JPY, as markets digest the Japanese data dump ahead of a busy US calendar.

USD/JPY supported at 5-DMA of 112.37

The spot is seen wavering near the daily pivot of 112.65, as the bulls await fresh incentives for the next push towards 113 levels. The bulls continued to guard the 5-DMA support in the Asian trades that allowed a recovery in the major back above 112.50 levels.

The renewed upside in the USD/JPY is mainly driven by the resurgence of US dollar demand across its main competitors, with the USD index jumping back above 93 handle, as investors expect the upcoming US macro releases to bolster Fed rate hike bets for this December.

Meanwhile, a series of mixed Japanese data left the JPY bulls on the back foot, while renewed jitters surrounding the Japanese politics also added to the negative sentiment around the Yen. Hence, the Yen markets ignored the IAEA warning on the North Korea nuclear developments issued earlier on the day.

Looking ahead, markets will continue to track the USD price-action ahead of the key US core PCE gauge and personal spending data, while the Fedspeaks will be also closely heard for fresh trading opportunities.

USD/JPY Technical Strategy

Jim Langlands at FX Charts lays out the preferred strategy: “US$Jpy did attempt to break higher once again, today reaching 113.20 but, unable to follow through, the bulls ran for cover and pushed the pair back towards 112.00, finishing on the lows of 112.30. Further range trading looks likely for the coming session although the short term momentum indicators do hint that a stronger test of 112.00 is possible. The dailies still look constructive, so buying dips below 112.00 with a SL placed sub 111.50 may be a plan although a NY close below the 200 DMA may entail further dips next week.”