“¢ A modest pull-back in equities underpins JPY’s safe-haven demand and exerts pressure.
“¢ The prevalent USD bullish sentiment extends some support and helped limit deeper losses.
“¢ Traders now eye US ADP report for some impetus ahead of Friday’s official jobs data.
The USD/JPY pair traded with a mild negative bias on Wednesday and was seen extending the overnight modest pullback from fresh YTD tops.
The pair did move beyond the key 112.00 barrier and climbed to the highest level since December 20 on Tuesday following the release of supportive US economic data – ISM non-manufacturing PMI and new home sales figures.
The uptick, however, lacked any strong follow-through and once again fizzled out at higher levels amid a modest pull-back in equity markets, which tends to underpin the Japanese Yen’s relative safe-haven status.
Meanwhile, the prevalent US Dollar bullish sentiment, supported by the recent rally in the US Treasury bond yields, turned out to be one of the key factors extending some support and limit deeper losses, at least for now.
Meanwhile, the recent two-way price action within a broader trading range since the beginning of this week clearly indicates that market participants await a fresh catalyst before positioning for the pair’s near-term trajectory.
Moving ahead, today’s US ADP report on private sector employment details will be looked upon for some impetus, through the key focus will remain on Friday’s official jobs report – popularly known as NFP.
Omkar Godbole, FXStreet’s own Analyst and Editor wrote, “the pair risks falling below 111.64 in the Europan session. That would confirm a double top breakdown and open the doors to 111.21 (target as per the measured move method). Interestingly, the 4-hour 50-candle MA is also located near 111.21.”
“USD/JPY may fall well below the double top breakdown target of 111.21 if the ADP employment figure prints below estimates. A big beat on expectations and risk-on in equities could fuel a rally to 112.30 (Nov.20 low) – 112.50,” he added further.