USD/JPY refreshes session high, inches closer to mid-115.00s on stellar US ADP report

• USD/JPY gained strong positive traction on Wednesday and reversed a major part of its weekly losses.
• A positive risk tone undermined the safe-haven JPY and extended support amid modest USD strength.
• Rebounding US bond yields, an upbeat US ADP report underpinned the buck and remained supportive.

The USD/JPY pair built on its steady intraday ascent through the early North American session and was last seen trading near the daily high, just below mid-115.00s post-US ADP report.

The pair attracted fresh buying near the 114.80-114.75 region on Wednesday and has now reversed a major part of its weekly losses recorded over the past two trading sessions. A slight improvement in the global risk sentiment drove investors away from traditional safe-haven assets and weighed on the Japanese yen. This, along with modest US dollar strength, acted as a tailwind for the USD/JPY pair and remained supportive of the intraday positive move.

Bulls further took cues from a goodish rebound in the US Treasury bond yields, which extended some support to the greenback. Apart from this, an upbeat US ADP report, showing that private-sector employers added 475K jobs in February, further underpinned the buck. The headline print surpassed expectations and was accompanied by a sharp upward revision of the previous month's print to show an addition of 509K jobs as against the loss of 301K reported previously.

It, however, remains to be seen if the USD/JPY pair is able to capitalize on the move or meets with a fresh supply at higher levels amid the worsening situation in Ukraine. In fact, the latest reports indicated that Russia has intensified the bombardment of Ukrainian cities and a large Russian convoy was approaching the capital Kyiv. Hence, it will be prudent to wait for some follow-through buying before positioning for any further near-term appreciating move.

Market participants now look forward to Fed Chair Jerome Powell's semi-annual testimony before the House Financial Services Committee for a fresh impetus around the USD/JPY pair. Meanwhile, the market focus will remain glued to the developments surrounding the Russia-Ukraine saga amid uncertainty about the timing of when the second round of talks would take place. This further warrants some caution for aggressive bullish traders.

Technical levels to watch