USD/JPY tries to recover from session lows after healthcare bill passes House

The USD/JPY pair fell to a new session low at 112.32 in the US afternoon and started to reclaim its losses as the market sentiment improved after the U.S. House of Representatives crossed 216 thresholds of votes to carry the Healthcare bill to the U.S. Senate. As of writing, the pair was trading at 112.48, still down 0.25% on the day.

The fact that the Republicans were able to come together after failing at the first voting in March, brought a wave of optimism. The major equity indexes in the U.S. changed course after staying under pressure for most of the session. The S&P 500 recovered its daily losses and moved back into the positive area, now adding 2.25 points. The Dow Jones Industrial Average was also able to trim most of its losses but is still down 0.07%, or 14 points, on the day.

On the other hand, the US Dollar Index continues to have a difficult time pulling away from its session low of 98.63, not allowing the pair to gather a recovery momentum. Japan will be on holiday on Friday and the pair could move in limited ranges until the nonfarm payroll numbers from the U.S. is released at the NA opening. Yesterday's ADP private sector employment data came in higher than expected but recorded a contraction from March to April, suggesting that the NFP's rebound in April may not be as strong as expected.

Technical outlook

The immediate resistance for the pair can be seen at 112.50 (100-DMA) ahead of 113.00/05 (psychological level/daily high) and 113.50 (Mar. 17 high). On the flip side, supports are located at 111.95 (May 3 low), 111.30 (50-DMA) and 110.35 (200-DMA).

• USD/JPY: a breakout of 113.00 is favoured – Commerzbank