USD/JPY climbs to fresh daily highs above 105.60 despite broad USD weakness

• USD/JPY is trading in the positive territory on Thursday.
• Wall Street’s main indexes look to open sharply higher.
• Greenback struggles to find demand after US data releases. 

The USD/JPY pair edged modestly higher in the early American session and rose to a fresh daily high of 105.63. As of writing, the pair was up 0.15% on the day at 105.61.

Risk flows hurt JPY on Thursday

Despite the broad-based USD weakness, the risk-on market environment seems to be weighing on the safe-haven JPY and helping USD/JPY gain traction. At the moment, the S&P 500 futures are up 0.85% on the day, suggesting that Wall Street’s main indexes could open the day decisively higher on Thursday. A rally in US stocks in the second half of the day is likely to allow USD/JPY to preserve its bullish momentum.

On the other hand, the US Dollar Index is staying in the negative territory near 93.70, limiting the pair’s potential upside for the time being.

The data published by the US Bureau of Economic Analysis showed on Thursday that the Core Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred gauge of inflation, rose to 1.6% on a yearly basis in August. 

Other data from the US revealed that Personal Income fell 2.7% in August and the weekly Initial Jobless Claims declined by 36,000 to 837,000 in the week ending September 26th.

Later in the session, the IHS Markit and the ISM will release the Manufacturing PMI data for September.

Technical levels to watch for