USD/JPY defends 112.00, bleed stemmed by gains in S&P 500 futures

• The USD/JPY has bounced off the psychological support of 112.00 in Asia, possibly due to an uptick in the S&P 500 futures.  
• The pair found bids below the 50-day exponential moving average (EMA) for the second day.  

The USD/JPY pair defended 112.00 a few minutes before press time and is now looking to post gains, tracking the positive action in the US index futures.  

As of writing, the S&P 500 are reporting a 0.60 percent gain. The moderate rise seems to have alleviated the downside pressure around the USD/JPY, helping it recover some lost ground. After all, the relative strength index on the 4-hour chart is reporting oversold conditions in USD/JPY.  

Building a base around 50-day EMA?

The positive action in the S&P 500 futures has helped the pair fade the drop below the 50-day EMA, currently located at 112.12.

Notably, the USD/JPY bears have failed to keep losses below the 50-day EMA for the second time in the last 12 hours, The EMA was breached in the overnight trade, as the Dow Jones Industrial Average fell by 500 points, following Wednesday’s 800 point drop, but the drop to 111.83 was short-lived and the NY close was above the 50-day EMA.  

The seller’s exhaustion below the 50-day EMA indicates scope for a minor corrective rally, although gains will likely be transient if the US equities continue to slide.  

USD/JPY Technical Levels

Resistance: 112.56 (Sept. 26 low), 112.82 (10-day EMA), 113.00 (psychological hurdle)

Support: 111.83 (previous day’s low), 111.39 (100-day EMA), 113.00 (psychological level)