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  • Private sector employment growth in the U.S. beats expectations.
  • US Dollar Index surges to fresh 2018 high above 97.
  • The BoJ leaves policy rate unchanged as anticipated.

The USD/JPY gained traction and extended its modest rally above the 113 mark as the dollar met additional demand following the upbeat employment report. As of writing, the pair was up 0.1% on the day at 113.23.

According to the ADP, private sector employment increased by 227,000 jobs from September to October in the United States to beat the analysts’ estimate of 218K. A separate report revealed that the employment cost index in the third quarter rose 0.8% in Q3 following Q2’s 0.6% reading. Commenting on the labour market data, “The US job market continues hot. Private payrolls are not the whole story for NFP but they are the largest and most productive part. A strong lead for Friday’s BLS report,” FXStreet senior analyst Joseph Trevisani said.

Boosted by the data, the US Dollar Index advanced to its highest level in 16 months at 97.13 and was last seen at 97.10, where it was adding 0.1% on a daily basis.

Earlier today, the Bank of Japan, as expected, announced its decision to leave the policy rate unchanged at -0.1%. In a press conference, Governor Kuroda said that there would be a monetary policy response if risks from overseas were to materialize. “Lowering rates, expanding monetary base, increasing asset purchases are among BOJ policy options,” Kuroda added.

Technical levels to consider

Resistances for the pair align at 113.30 (daily high) ahead of 113.90 (Oct. 8 high) and 114.55 (Oct. 3 high). On the downside, supports could be seen at 112.45 (50-DMA), 111.80 (100-DMA) and 111.10 (Sep. 12 low).