USD/JPY decline halted near 112.00… for the moment

The greenback is sharply lower vs. its Japanese peer on Thursday, dragging USD/JPY to challenge the key support at 112.00 the figure, or session lows.

USD/JPY lower on US selling, yields decline

The pair remains on the defensive today, trading in the area of 2-month lows and threatening to break below the 112.00 handle, which has acted as strong support in past sessions.

The selling interest continues to hurt the buck and drag US yields lower, particularly the 10-year benchmark, which has faded yesterday’s spike to the boundaries of 2.52% and has so far retreated to daily lows around 2.45%.

Data wise in the US, Initial Claims rose to 246K WoW, bettering estimates and taking the 4-Week Average to 248K from 245.75K. Further releases saw Q4’s Non-farm Productivity expanding 1.3% vs. 1.0% forecasted while Unit Labor Costs rose less  than consensus 1.7% inter-quarter in Q4.

Looking ahead, the BoJ minutes are due tomorrow followed by Markit’s Services PMI, all preceding the always critical Non-farm Payrolls in the US (175K exp.).

USD/JPY levels to consider

As of writing the pair is retreating 0.72% at 112.42 and a break below 112.04 (low Jan.31) would aim for 111.98 (38.2% Fibo of the November-December 2015 up move) and then 111.32 (low Nov.28). On the upside, the initial hurdle sits at 113.30 (high Feb.2) followed by 113.97 (high Jan.31) and finally 114.30 (20-day sma).