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  • USD/JPY seesawed between tepid gains/minor losses through the early North American session.
  • The ADP report showed that the US private-sector employment declined by 2.76 million in May.
  • The prevalent USD selling bias seemed to be the only factor holding bulls from placing fresh bets.

The USD/JPY pair extended its sideways consolidative price action through the early North American session and had a rather muted reaction to the US macro data.

Sustained US dollar weakness remained the dominant theme in the FX market on Wednesday and failed to assist the USD/JPY pair to capitalize on the previous day’s strong positive move of over 125 pips. The pair witnessed a modest intraday pullback from two-month tops set earlier this Wednesday, albeit the upbeat market mood undermined the safe-haven Japanese yen and helped limit any deeper losses.

The global risk sentiment remained well supported by rising hopes for a sharp V-shaped economic recovery, especially after the easing of lockdown restrictions across the world. The positive factor, to some extent, was negated by heightened concerns over US-China tensions and civic unrest across the US over the death of a black man, George Floyd, in the Minneapolis police custody.

Meanwhile, the USD remained depressed and failed to gain any respite following the release of the ADP report, which showed that private-sector employment declined by 2.76 million in May. The reading surpassed even the most optimistic estimates, albeit did little to impress traders. Wednesday’s US economic docket also highlights the release of the ISM Non-Manufacturing PMI, which will now be looked upon for some impetus.

From a technical perspective, the pair has managed to find acceptance above the very important 200-day SMA. The set-up supports prospects for a further near-term appreciating move, though bulls seemed to wait for a fresh catalyst before placing any aggressive bets.

Technical levels to watch