USD/JPY rebound from 112.00 finds resistance at 112.85

• USD/JPY gains for the second day in a row. 
• Yen weakened amid risk appetite. 
• Data ahead: Japan’s Service PMI and US jobs report. 

The USD/JPY pair gained momentum earlier today after the release of US economic data and rose to 112.85. The pair peaked at 112.86 and since then it has been moving in a small range between 112.72 and 112.85, consolidating gains. It is headed toward the second daily gain in a row. 

The ADP report and the Service PMI in the US came in above expectation and boosted the US dollar against the yen. Both currencies were among the worst performers. The yen was affected by risk appetite with the Dow Jones hitting 25,000. The greenback continued under pressure, moving with a bearish tone. The US Dollar Index (spot) resumed the slide after a brief pause on Wednesday and fell to test multi-month lows near 91.70.

The consolidation mode in USD/JPY could continue during Friday’s Asian session. The key event will be the release of the US employment report. Payrolls are expected to have risen by 190K in December. The ADP report on private employment released on Thursday surpassed expectations.

USD/JPY Technical outlook 

“The bearish pressured eased, according to technical readings, as the pair managed to hold above its 100 DMA, currently at 112.55. In the 4 hours chart, the pair is stuck between horizontal moving averages, with the 100 SMA offering a short-term resistance around 112.90”, said Valeria Bednarik, Chief Analyst at FXStreet. 

According to her, the 4 hours chart shows Momentum headed sharply higher above its 100 level, while the RSI hovers around 56, supporting some further advances on a break above 113.00.