Manufacturing conditions edged up to 15.2 in June, the highest reading since December, from 6.7 in May, the Philadelphia Federal Reserve Bank report showed.
Another report from the U.S. released on Thursday showed that consumer prices posted the biggest surge in more than two years in May.
With the improvement in economic data, the Fed may raise interest rates as early as September, rather than later in the year.
The dollar pared some of its losses versus the yen to trade around 123.00 after hitting a bottom of 122.46.
The green currency remained under pressure for a second straight session after dovish comments from the Fed on Wednesday.
Meanwhile, seven FOMC members are in favor of raising rates only once or not at all this year, where Fed officials predict slightly lower rates at the end of 2016 and 2017, compared to their projections in March.
The Fed slashed its growth forecasts to a range between 1.8% and 2% for 2015, compared to a range between 2.3% to 2.7% predicted in March.
The USDJPY 4-hour chart shows a rebound after the previous five candles have witnessed a drop, as the pair found support near 50% Fibo for the upside rally that began on May 15.
It is clear that the breach of the key support line and the several closings below has supported the bearish direction.
The RSI 14 signals a turnaround after falling towards the 30 line.