USD/JPY in search of a firm direction, confined in a narrow range above mid-110.00s

The USD/JPY pair struggled for a firm direction and was seen oscillating in a 25-pips narrow trading range above mid-110.00s.

On Wednesday, the pair failed just ahead of the 111.00 handle and fell to 110.30 level on weaker-than-expected US private sector employment details - ADP report. The downfall, however, was limited and the pair managed settled with gains for the second consecutive session, led by diminishing safe-haven demand after the Dow Jones cruised to the 22K milestone.

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The pair, however, lacked any strong follow through momentum and today's lacklustre trade could be attributed to the prevalent risk-off environment, led by weaker Chinese services PMI print was seen lending support to the Japanese Yen's safe-haven demand. Adding to this, the US Dollar Index languished near 15-month lows and has failed to provide any fresh bullish impetus to the major, leading to a range bound price action through Asian trading session on Thursday.

   •  Asia: Weak PMIs across the region – Westpac

Investors now seemed to wait for Friday's official NFP data, which would drive the greenback in the near-term and help determine the next leg of directional move for the major. In the meantime, today’s release of ISM non-manufacturing PMI print might provide some trading impetus later during the NA session.

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet writes: "Rally to 10-DMA or above cannot be ruled out, although such a move is likely to be met with fresh offers. The spot looks set to revisit 109.92 levels. An end of the day close below the same would signal continuation of the sell-off from the high of 114.49 and yield 109.11 [June 7 low]. On the higher side, only an end of the day close above 10-DMA would signal the spot has bottomed out."