USD/JPY trades near the highs for the day close to 112.90
Some traders are citing short covering ahead of European trading as the reason for the move higher in USD/JPY, with the Nikkei supportive of that factor closing higher by 0.8% earlier. But from a technical standpoint, the bounce also comes after price tested the 100-day MA (red line) overnight and failed to break below it once again.
It was a timely recovery for US stocks that helped to alleviate pressure off the pair and once again the 100-day MA fails to be breached since April this year. As mentioned yesterday, that is a pivotal point for the pair as a break below it will signify further downside but at the moment it is still the key level that buyers are holding on to as their last line of defense.