- USD/JPY stretches higher toward 109.00 following Tuesday’s rally.
- Economic activity in the US service sector contracted at a modest pace in May.
- Wall Street’s main indexes rise for the third straight day.
The USD/JPY pair gained more than 100 pips on Tuesday and staged a technical correction during the first half of the day on Wednesday. With risk-on flows continuing to dominate the financial markets during the American session, the pair edged higher and touched its best level since early April at 108.88. As of writing, the pair was up 0.17% on the day at 108.86.
Wall Street opens on a strong footing
The upbeat macroeconomic data releases from the US on Wednesday helped the sentiment remain positive. The monthly ADP report revealed that private sector employment declined by 2.76 million in May, which came in much better than analysts’ estimate of 9 million. Furthermore, the ISM Non-Manufacturing PMI rose to 45.4 from 41.8 to reveal that the economic activity in the service sector contracted at a softer pace than it id in April.
Boosted by the data, Wall Street’s main indexes started the day in the positive territory. As of writing, the Dow Jones Industrial Average and the S&P 500 were up 1.2% and 1.5% on the day.
Meanwhile, the greenback is also having a difficult time finding demand and limiting the pair’s upside. At the moment, the US Dollar Index is losing 0.4% on the day at 97.29.
There won’t be any significant macroeconomic data releases from Japan on Thursday and the risk perception is likely to continue to impact USD/JPY’s movements.
Technical levels to watch for
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