USD/JPY clings to gains above 107.50 after ADP data, eyes on Wall Street

• ADP Employment Change in February came in higher than expected.
• 10-year US T-bond yield posts modest daily gains.
• Focus shifts to Wall Street’s, ISM Non-Manufacturing PMI data.

After slumping to its lowest level since early October at 106.86 on Tuesday, the USD/JPY pair staged a decisive rebound on Wednesday and was last seen trading at 107.55, adding 0.4% on a daily basis.

Following the Federal Reserve’s emergency rate cut on Tuesday, the 10-year US Treasury bond yield erased more than 10% and fell to an all-time low below the critical 1% mark to drag the pair lower. Additionally, the broad-based selling pressure surrounding the greenback put additional weight on the pair’s shoulders. 

DXY looks to snap four-day losing streak

With the 10-year US T-bond yield rising more than 1%, the pair reversed its direction. Meanwhile, the upbeat data from the US helped the USD preserve its strength as well.

The ADP’s monthly report showed that employment in the US’ private sector increased 183,000 in February to beat the market expectation of 170,000. On a negative note, January’s reading of 291,000 got revised down to 209,000. Nevertheless, the US Dollar Index (DXY) was last up 0.3% on the day at 97.43.

Later in the session, the IHS Markit’s Services PMI (final) and the ISM’s Non-Manufacturing PMI reports will be looked upon for fresh impetus. Furthermore, investors will be keeping a close eye on Wall Street’s main indexes, which look to rebound sharply following Tuesday’s slump. 

Technical levels to watch for