Search ForexCrunch
  • Greenback gathers strength on the back of upbeat employment data.
  • The Fed is expected to keep its monetary policy unchanged.
  • The 10-Year US T-bond yield stays flat on the day.

The USD/JPY pair staged a modest rebound in the last hour as the greenback gathered strength on the back of the upbeat Automatic Data Processing (ADP) employment data. However, with investors not looking to commit to large positions ahead of the Federal Reserve’s announcements, the pair struggles to gain traction and was last virtually flat on the day at 111.40.

In its monthly report, the ADP reported that employment in the private sector increased by 275,000 from March to April to beat the market expectation of 180,000. Moreover, the March reading got revised up to 151,000 from 129,000. With the initial market reaction, the US Dollar Index started retracing today’s fall and was last seen at 97.45, losing 0.07% on a daily basis. Later in the session, the IHS Markit’s Manufacturing PMI report will be published in the U.S.

However, the market reaction is likely to stay short-lived with investors eagerly waiting for the FOMC to publish its policy statement.

“As widely  expected,  we  expect the FOMC to  stay on hold at the conclusion of the  30  April-1  May meeting.  The Fed  should deliver a balanced message  on the economy  through the policy statement and the press conference,” Bank of America Merrill Lynch analysts said.  “A hawkish rates response to this Wednesday’s FOMC decision is likely to provide support to the USD.”

Meanwhile, the 10-year T-bond yield is moving sideways around yesterday’s closing level, not providing any clues regarding the market sentiment.  

Technical levels to consider

The pair could face the initial support  at 110.90 (Apr. 11 low) ahead of  110.60 (100-DMA) and 110 (psychological level). On the upside, resistances are located at 111.55 (200-DMA), 112 (psychological level) and 112.40 (Apr. 24 high).