USD/JPY fails ahead of 111.00 handle, US ADP report in focus

The USD/JPY pair was seen building on overnight sharp recovery move from 7-week lows and moved within striking distance of reclaiming the 111.00 handle.

On Tuesday, the pair dipped below the key 110.00 psychological mark on disappointing US economic data that might hold the Fed from raising interest rates further in 2017. However, a strong rally in the US equity markets dampened the Japanese Yen's safe-haven appeal and helped the pair to recover from lower levels. 

The pair continued gaining traction through early European session on Wednesday and remained supported by the positive tone around the US Treasury bond yields. Bulls, however, seemed struggling at higher level amid a lack of any strong follow through greenback buying interest, with the key US Dollar Index still languishing around 15-month lows.

Today's highlight from the US economic docket would be the release of ADP report on the US private sector employment, which might influence market expectations over Friday's official headline NFP print and should provide some fresh impetus for the major.

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet writes: "The spot looks set to test weekly 200-MA level of 111.28 and may extend gains to 111.85 [weekly 100-MA] if the US ADP private sector employment data due at 12:15 GMT] beats estimates. However, gains above the weekly 200-MA of 111.28 could be short lived as the 10-DMA is still sloping downwards."