USD/JPY jumps to 112.90 after US data

The US Dollar continued to recover across the board boosted by US economic data. USD/JPY erased most of the day’s losses after rising back above 112.70. 

ADP and service sector data 

Today’s first report was the ADP that showed an increase in private payroll in September by 135K, above expectations. The number was significantly below the 228K of August, affected by Hurricanes. The next report was the US ISM non-manufacturing that surprised analysts with a rise to 59.8 in September against the 55.5 expected. 

US: Service sector business activity growth remains strong in September - Markit 

US: Economic activity in the non-manufacturing sector grew in September - ISM

After the last report, USD/JPY peaked at 112.89 but failed to break above. Then pulled back and at the moment of writing it was trading at 112.75, less than 20 pips below yesterday’s close. The upside move was also supported by higher US bond yields. 

Despite today’s rebound, the US dollar still shows some weakness amid uncertainties about the next Fed’s Chair.  Later today, Yellen will deliver a speech. 

Technical levels 

To the upside, the immediate resistance is the 112.90 area; above here the pair could gain momentum for a test of the key short-term area located around 113.20 that capped the upside yesterday and also last week. 

On the flip side, supports could be seen at 112.60 (20-hour moving average), 112.30 (daily low) and 111.85 (Sep 19 high).