USD/JPY surges through 111.00 post-ADP, focus remains on Fed minutes

The greenback gained fresh traction during early NA session, helping the USD/JPY pair to build on to its recovery momentum further beyond the 111.00 handle.

The pair caught fresh bids in wake of strong private sector employment growth for the second consecutive month. According to the ADP report, released on Wednesday, private employers added 263K new jobs during March, easily surpassing consensus estimates pointing to a gain of 187K and even better-than last month's stellar 245K (revised lower from 298K). 

The ADP report drives market expectations for the official jobs data, popularly known as NFP, scheduled for release on Friday. Hence, today's upbeat reading triggered a fresh leg of up-move in the US treasury bond yields and underpinned the greenback demand, with the key US Dollar Index spiking back closer to mid-100.00s and lifted the pair to fresh session tops near 111.20-25 region.

Today's US economic docket also features the release of ISM non-manufacturing PMI print for March. However, the spotlight would remain on the Fed minutes, due later during the NY session, which might influence investors’ expectations over the central bank's rate-tightening cycle and eventually determine the pair's near-term trajectory.

FOMC minutes in the limelight - Rabobank

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet writes, "despite recovery from the low of 110.27 to 110.91, the outlook remains bearish given the failure to hold above 111.83 last week. The daily RSI remains bearish. The MACD remains below zero (bearish) as well; however, Tuesday’s candle with long tail does underscore the need to be cautious here. Nevertheless, a break below 110.00 could result in a quick fire drop to the floor of the falling wedge seen around 109.50-109.40 levels. In the short-run, only a bullish break from the falling wedge would signal trend reversal."