USD/JPY refreshes weekly lows near 112 as US stocks push lower

• US stocks stay under pressure on Thursday.
• DXY erases daily gains, returns to mid-93s.
• 10-year US T-bond yield struggles to stay in the positive territory.

After spending the majority of the day in a tight range below the 113 handle, the USD/JPY lost traction in the American trading hours and dropped to its lowest level since December 6 at 112.07. As of writing, the pair was trading at 115.25, losing 0.26% on the day.

Greenback struggles to preserve its momentum

The pair's price action on Thursday is being dominated by the US Dollar Index's fluctuations. Following yesterday's FOMC-led sharp drop, the DXY staged a modest recovery during the first half of the NA session after the macroeconomic data from the United States beat the market estimates. However, the index failed to retake the 94 handle as the 10-year US T-bond yield started to retrace its daily gains and weighed on the buck. At the moment, the index is back at 93.50, up only 0.1% on the day.

Meanwhile, the safe-haven JPY seems to be receiving an additional boost from the weakening sentiment on Thursday. After starting the day on a positive note, major equity indexes in the United States turned negative amid heavy losses witnessed in the healthcare shares. The Dow Jones Industrial Average and the S&P 500 were losing 0.05% and 0.25% respectively at the time of writing while the Nasdaq Composite was flat, buoyed by the relatively upbeat performance of technology shares.

With no more data left in the remainder of the week that could impact the price action, the pair is likely to continue to track the US Dollar Index's movements.

Technical outlook

Valeria Bednarik, American Chief Analyst at FXStreet, writes, "in the 4 hours chart, the price has broken below its 100 SMA that anyway remains horizontal, after being capped by an also directionless 200 SMA, while technical indicators accelerated south, now nearing oversold readings. Further declines below should came below the 111.80 price zone, where in the daily chart, the pair has its 100 and 200 DMAs."

According to the analyst, supports for the pair could be seen at 111.80, 111.40 and 111.00 while technical resistances align at 112.65, 113.00 and 113.40.