USD/JPY recovers a few pips from daily low, finds some support near 148.00 mark

• USD/JPY meets with a fresh supply on Thursday, albeit lacks follow-through.
• A combination of factors boosts the JPY and exerts pressure on the major.
• Reduced bets for more Fed rate hikes drag the USD away from the YTD top.

The USD/JPY pair comes under some renewed selling pressure following the previous day's modest uptick and drops closer to the 148.00 mark during the Asian session on Thursday. This marks the second day of a negative move in the previous three, though spot prices manage to recover a few pips in the last hour and hold above the lowest level since September 14 touched on Tuesday.

The market is attributing the fall in the USD/JPY pair to Gotobi, which refers to the practice in Japan of making certain payments on specific days of the month that end in a "5" or "0" (like the 5th, 10th, 15th, 20th, 25th, and 30th). Furthermore, speculation that Japanese authorities may have intervened in the FX market, especially after the Japanese Yen (JPY) weakened below the 150.00 psychological mark against its American counterpart earlier this week, prompt some long-unwinding.

The US Dollar (USD), on the other hand, extends the overnight pullback from a nearly 11-month top touched on Tuesday and turns out to be another factor exerting downward pressure on the USD/JPY pair. The disappointing release of the US ADP report on Wednesday, along with a moderation in the US services sector, gives the Federal Reserve (Fed) some incentive to stop raising interest rates. This leads to a further decline in the US Treasury bond yields and undermines the USD.

That said, the recent comments by several Fed officials backed the case for further policy tightening to bring inflation back to the 2% target. Moreover, the markets have been pricing in the possibility of at least one more lift-off by the end of this year and seem convinced that the Fed will keep rates higher for longer. This should act as a tailwind for the US bond yields and the Greenback, which, in turn, warrants some caution before placing aggressive bearish bets around the USD/JPY pair.

Investors might also prefer to wait on the sidelines ahead of the release of the closely-watched US monthly employment details, popularly known as the NFP report on Friday. In the meantime, traders on Thursday will take cues from the release of the usual Weekly Initial Jobless Claims data from the US. Apart from this, the US bond yields might influence the USD price dynamics and produce short-term trading opportunities around the USD/JPY pair.

Technical levels to watch