Subdued USD/US bond yields prompted some fresh selling on Thursday. Stability in equity markets do little to provide any fresh bullish impetus. ADP report/ISM PMI might provide some opportunities ahead of Friday’s NFP.
The USD/JPY pair held on to its weaker tone through the early European session, albeit has managed to hold few pips above Asian session lows.
The pair extended overnight retracement from weekly high level of 111.76 and now seems to have snapped four consecutive days of winning streak. Currently trading around the 111.30 region, today's downtick seemed lacking any obvious catalyst and could be attributed to a subdued price action around the US Dollar.
Bullish traders seemed little inspired by some signs of calmness in the global financial markets, as depicted by a stable opening across European equity markets. Even a modest uptick US Treasury bond yields did little to provide any meaningful boost, though seemed to help limit further downside, at least for the time being.
Moving ahead, today's US economic docket, highlighting the release of ADP report and ISM non-manufacturing PMI, will now be looked upon for some fresh impetus. The key focus, however, would remain on Friday's closely watched US non-farm payrolls data, which might influence the pair's near-term trajectory.
Omkar Godbole, Analyst and Editor at FXStreet writes: “A close below 110.68 (Aug. 31 low) would mean the rally from the Aug. 21 low of 109.77 has made a top at 111.83 and could yield a deeper drop to 1009.77. Acceptance below that level would signal a revival of the sell-off from the July 19 high of 113.18.”
“On the higher side, a daily close above 111.88 (61.8% Fib R of July 19 high/Aug. 21 low) is needed to confirm a bull breakout and open the doors to re-test of the recent high of 113.18” he adds further.