FxWirePro: USD/JPY shakes off ADP-led weakness and edges higher, hawkish Fed comments boost dollar

USD/JPY chart - Trading View 

USD/JPY was trading 0.19% higher on the day at 109.68 at around 04:30 GMT, after closing 0.42% higher in the previous session.

The pair retraced from multi-week lows at 108.72 and closed above 109 handle after the US dollar shook off dismal ADP-led gains. 

Traders were trying to strike a balance between weak payrolls data and hawkish comments from Fed officials.

ADP National Employment Report showed U.S. private payrolls increased far less than expected in July. However, that data was offset by strongest ever reading for U.S. services PMI.

ADP Employment Change for July slumped to 330K versus 695K expected and 680K prior (revised),  while ISM Services PMI for July jumped to 64.1 versus 60.4 prior and challenged the market bears.

Further, Fed's Richard Clarida, Janet Yellen and Mary Daly flashed clues of tapering in their recent public appearances, which underpinned the US dollar.

The dollar index DXY firmed on the hawkish comments and was consolidating previous session's 0.23% gains. The spotlight now remains over Friday's non-farm payroll data. 

USD/JPY has bounced off 110-EMA and has retraced into daily cloud. Price action has retraced brief dip below 200-week MA.

RSI is now biased higher, but remains below the 50 mark. 5-DMA has turned. Series of resistance seen till 109.88. Decisive break above will see upside resumption.