USD/JPY finds support near 100-DMA, US ADP in focus

Having faced strong offers just shy of 103 handle, the USD/JPY pair fell sharply to test 100-DMA support in the last hour, before recovering some ground to now revert towards daily tops.

USD/JPY likely to reclaim 103 handle?

The dollar-yen pair is seen recovering losses, with the bulls fighting back control amid improving risk appetite, as the Japanese stocks retest daily highs and commodities’ prices stage a minor-recovery after yesterday’s sell-off. USD/JPY is last seen exchanging hands around 102.85 levels, almost unchanged on the day.

The recovery in the major is also backed by renewed yen weakness after the Nikkei services PMI report showed that the Japan’s services sector activity contracted at the fastest pace in 2 years, with the reading of 48.2 reported in Sept against August’s 49.6.

While talks of BOJ continuing with its bond buying program also acts as a drag on the Japanese currency, providing extra legs to the USD/JPY recovery back towards 103 handle.

All eyes now turn towards the US ADP jobs report and ISM services report due later in the NA session for confirmation on the recent signs of strength seen in the US economic recovery.

USD/JPY Technical levels to watch 

In terms of technicals , the immediate resistance is located at 103 (3-week tops). A break above the last, the major could test 103.36 (mid-Sept high) and 103.90 (daily R2) beyond the last. While to the downside, the immediate support is seen at 102.70/68 (100-DMA/ daily low), next at 102.47 (daily pivot) and below that at 102.04 (5-DMA).