USD/JPY downside playing out, fresh lows scored in Tokyo

Currently, USD/JPY is trading at 110.37, down -0.30% on the day, having posted a daily high at 110.75 and low at 110.34.

USD/JPY is better offered and continues with the downtrend from overnight FOMC minutes sell-off. The minutes were indeed hawkish, but the market fears that tapering will be negative for sentiment the yen benefitted while the dollar and US yields dropped. The US 10yr treasury yields initially rose from 2.34% to 2.38% but reversed to 2.32% following the FOMC minutes, noted analysts at Westpac, adding, " 2yr yields similarly rose from 1.25% to 1.27% before falling to 1.22%, while. Fed fund futures yields are net firmer, now pricing a June rate hike as a 70% chance (from 65%)." 

Wall Street finishes lower as FOMC minutes disappoints

For now, the major risks come in the nonfarm payrolls and headlines from President Trump's meeting with his Chinse counterpart, Xi. The ADP report overnight was a positive prelude to Friday's government numbers. The breakdown of the ADP report was as follows, as reported by the analysts at Westpac. "ADP employment rose 263k in March (185k expected). Gains were broad-based: goods-producing employment rose 82k, services +181k., construction +49k, manufacturing +30k, mining +4k, professional and business services +57k, leisure and hospitality +55k, and healthcare +46k. The strong report adds upside risk to Friday's payrolls outcome."

"We expect some commercial deals to be agreed to during Xi's visit," explained analysts at Brown Brothers Harriman. " We would not be surprised if the US and China agreed to trade talks, like the ones agreed to with Japan.  It is on this side of Alice's Looking Glass that the Chinese President may caution the US President against slipping into mercantilism and abandoning free trade principles when the two meet at Mar-a-Lago in FloridaThursday and Friday.        

USD/JPY levels

USDJPY: Markets look set to remain nervous and choppy

Valeria Bednarik, chief analyst at FXStreet explained that in the 4 hours chart, as the intraday advance stalled well below a bearish 100 SMA, whilst the Momentum indicator was unable to recover above its 100 level, as the RSI indicator lost upward strength around neutral levels. The pair has an immediate resistance at 111.60, and a stronger one around 112.00, this last expected to cap advances on Thursday ahead of Friday's NFP release.