USD/JPY's fall in the wake of the as-expected Fed meeting exposed an overbought market due a correction, which could take it to supports by 108.75 before tomorrow's U.S. jobs report. Losses could persist to the 100-DMA and 38.2% of the 106.62-110.05, where the up trend line off March-April will converge on Friday.
Today's disappointing non-manufacturing ISM was undermined by the employment index drop to 53.6 from 56.6 nN9N1OC00E.
This will weigh on expectations for Friday's data, Treasury yields and the dollar.
However, slowing employment growth could partly be due to dwindling supplies of suitable labor, not a lack of demand, which would favor further Fed tightening and a stronger USD.
Safe-haven yen buying amid U.S.-China trade talks nL3N1SA1E0 and indications President Trump may pull the U.S. out of the Iran nuclear agreement nL1N1S927T is encouraging the USD/JPY pullback.
The puny 5 tic breakout above 110 Wednesday and failure to reach the key 200-DMA at 110.23 is prompting recent longs to lighten up and look for better buying levels.
This dip-buying bias will persist unless USD/JPY closes below the cloud top, Kijun and 61.8% props by 108 after tomorrow's NFP report.
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