USD/JPY: weak corrective attempts to the upside in Tokyo, capped at 112.63

Currently, USD/JPY is trading at 112.54, up 0.18% on the day, having posted a daily high at 112.63 and low at 112.27.

Forex today: FX investors not so convinced and dollar takes a month-end hit

USD/JPY, in a correction, bulls were unable to stay above the 118 handle in NY.  Interest rate differentials remain a headwind as we note the continued widening in yield spreads at both the short and longer-end of the curve. "However, sentiment appears to be shifting aggressively. Risk reversals are showing a sizeable increase in the premium for protection against JPY strength (USDJPY weakness) as market participants assess the balance of risks into the October 22 election," as noted by analysts at Scotiabank.

BOJ Summary of Opinions: Chance of inflation hitting 2% target next year is low

The major closed -0.42% at 112.37 and well below the critical 112.80 support. The greenback was on the back-foot with profit taking and scepticism over how the proposed tax cuts can really help the economy while still there was no real detail delivered to go on, and as demanding the FX markets are, it was the small caps and banks that marched on instead. 

USD/JPY levels

USDJPY: Buying dips below 112.00

Chief analyst at FXStreet, Valeria Bednarik explained that the pair is poised to extend its decline: "According to technical readings in the 4 hours chart, technical indicators turned lower, still within positive territory, but supporting an upcoming bearish correction particularly on a break below 112.25, Wednesday's low."