USD/JPY clings to daily gains near mid-111s despite disappointing ADP data
- Number of employed in private sector rises less than expected in the U.S.
- 10-year US T-bond yield gains more than 1.5% on the day.
- US Dollar Index continues to float above 97.
The USD/JPY pair is trading in a relatively tight range on Wednesday as the rising US T-bond yields offset the broad USD weakness. As of writing, the pair was up 0.12% on a daily basis at 111.44.
Following yesterday's correctional drop, the 10-year T-bond yield on Wednesday gained traction and advanced to its highest level since March 22 by adding more than 1.5% on a daily basis. Although the USD/JPY pair usually shows a positive correlation with the T-bond yields, the selling pressure surrounding the USD didn't allow the pair to push higher. Nevertheless, the improved sentiment made it difficult for the JPY to gather strength against its peers.
The US Dollar Index, which advanced to a multi-week high of 97.52 on Tuesday, reversed its course today with the greenback struggling to find demand in the risk-positive environment. The data published by the ADP earlier today revealed that the employment in the private sector increased 129K in March and fell short of the market expectation of 170K. While investors are waiting for the ISM's and the IHS Markit's Services PMI data, the DXY is losing 0.22% on the day at 97.10.
Technical levels to consider
The pair could face the initial resistance at 111.50 (200-DMA) ahead of 111.90 (Mar. 15 high) and 112.15 (Mar. 5 high). On the downside, supports are located at 111.20 (daily low), 110.85 (50-DMA) and 110.50 (100-DMA).