USD/JPY advances above 111 as Wall Street recovers early losses
The USD/JPY pair struggled to extend Wednesday gains and spent the majority of the day moving sideways above the 111 handle before coming under pressure in the first half of the NA session. After dropping to a daily low at 110.70, however, the pair started to retrace its daily losses and was last seen at 111.05, where it was still down 0.23% on the day.
Following a drop to a daily low at 90.20 during the American trading hours, the US Dollar Index rose to mid-90s and once again lost its momentum with the uncertainty surrounding the possibility of a government shutdown. At the moment, the index is down 0.4% at 90.30. A spokeswoman for the U.S. State Department recently said that the government was preparing for a shutdown. On the other hand, a Senator earlier argued that if the one-month spending bill fails to pass the Senate they could try to pass a short-term, a couple of days long, spending bill.
Meanwhile, the rising T-bond yields and major American equity indexes' attempt to move into the positive territory reflect an improving market sentiment in the session which makes it difficult for the JPY to remain resilient against the buck. The 10-year T-bond yield was up 1.3% as of writing while the S&P 500 was adding 0.02% and the Dow Jones Industrial Average, which lost as much as 0.6%, was down only 0.2%.
The first critical resistance for the pair aligns at 111.75 (200-DMA). A decisive break above that level could open the door for further gains toward 112.40 (50-DMA) and 113.20 (Jan. 9 high). On the downside, supports could be seen at 110.70 (daily low), 110 (psychological level) and 109.50 (Sep. 14 low).