USD/JPY spikes to fresh six week highs ahead of FOMC

The USD/JPY pair continued scaling higher and spiked to fresh six week highs following the release of private sector employment report from the US.

Currently trading at 112.35-40 band, the pair added to daily gains after the US ADP report showed private-sector employers added slightly higher-than-expected news jobs (177K) during the month of April. 

Today's positive reading reflected the underlying strength in the US labor market and helped ease some of the concerns of a sharp economic slowdown, especially after the recent slew of weaker macroeconomic indicators. The data also helped the greenback to maintain its positive bias through early NA session, with the key US Dollar Index now placed at session peak near the 99.00 handle and lifting the pair to its highest level since March 21.

Up next would be the release of US ISM non-manufacturing PMI, which might provide some short-term trading opportunities ahead of the much-awaited FOMC decision later during the NY session.

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Technical levels to watch

A follow through buying interest beyond mid-112.00s now seems to pave way for continuation of the pair’s near-term upward trajectory further towards 112.75-80 intermediate resistance ahead of the 113.00 handle.

On the downside, the 112.00 round figure mark remains immediate support to defend, which if broken might trigger a near-term corrective slide initially towards mid-111.00s en-route the 111.00 handle.