USD/JPY rebounds from weekly lows, back to 112.00

USD/JPY is trading back into positive territory for the day. The US dollar rebounded from 3-week lows that reached at 111.47 and currently is hovering slightly below 112.00. The recovery took place amid reversal in the bond market. US yields rose from the lowest since late June during the last three hours and are now unchanged for the day. 

Earlier today the pair peaked at 112.42 following the Bank of Japan monetary policy meeting. The central bank left rates and yield control policy unchanged as expected. During the European session, a driver of price action in USD/JPY were US bond yields. The pair followed the recovery in US bonds and also the reversal. The 10-year bottomed at 2.23% and now stands at 2.26%. 

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Despite holding against the yen, the greenback lost ground again. The US Dollar Index is down 0.50% on Thursday, about to post the lowest close in a year. 

USD/JPY Technical outlook 

According to Valeria Bednarik, Chief Analyst at FXStreet, the bearish stance remains strong, as the early advance met selling interest around the 38.2% retracement of the latest bullish run, with the pair unable to confirm a break below 111.60, the 50%  retracement of the same rally.

“In the 4 hours chart, the price is once again struggling with its 200 SMA, while technical indicators are recovering modestly within bearish territory and below their previous daily highs, not enough to support additional gains ahead”, said Bednarik.