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  • USD/JPY is currently trading at 111.50, stuck in a tich range between 111.35 and 111.50 with most of Asia out on holiday
  • Overnight, USD/JPY traded a range of 111.05 to 111.61 on the Fed news and the US 10yr treasury bounced to 2.51%.

The outcome of Powell’s testimony rescued the dollar and U.S. yields. The DXY traded between 97.15 lows to a high of 97.73 by the time Powell had wrapped up an upbeat press-conference while the US 10yr treasury yield initially dropped from 2.50% to 2.47% after a disappointing manufacturing PMI print and then 2.46% on the initial FOMC headlines before but bouncing to 2.51% on Powell.  

For a full load down of the action in the U.S. session see here:  Forex today: Dollar better bid following Fed’s Powell’s upbeat Presser tone

U.S. data

As for US data, analysts at Westpac explained:

  • US payrolls processor ADP reported a 275k lift in private jobs in April, well above expectations, though the survey has a checkered track record in predicting non-farm payrolls, due this Friday.
  • The April ISM manufacturing index fell to a 2 ½ year low of 52.8 from 55.3, bucking signs of stabilisation from other key data points. New orders, employment and output all weakened though they all remain above the 50 expansion-contraction dividing line, signalling a positive albeit at a slower pace of manufacturing activity.

Looking ahead  to nonfarm payrolls:  Non-Farm Payrolls: ADP and ISM point in different directions

USD/JPY levels

Valeria Bednarik, Chief Analyst at FXStreet explained that the yen remains reluctant to give up to dollar’s demand:

“The 4 hours chart for the pair shows that it’s unable to firmly regain ground above a bearish 20 SMA, while technical indicators have bounced from their intraday lows, but hold within negative levels. The pair would need to clear the 111.70 resistance to be able to extend it gains, quite unlikely ahead of the US Nonfarm Payrolls report next Wednesday.”