USD/JPY reverses early dip, back near weekly tops

   •  Softer Chinese PMI prompts some early weakness.
   •  Dip buying now seemed to limit further downside.
   •  Poised to gain further ahead of the US macro data.

The USD/JPY pair reversed an early Asian session dip to 106.40 level and has now moved back closer to weekly tops.

A subdued US Dollar price-action failed to assist the pair to build on its overnight strong up-move, with an unexpected decline in Chinese Caixin Services PMI prompting some weakness during the Asian session on Wednesday.

In initial dip lacked any follow-through and was quickly bought into amid some signs of stability in global financial markets, which tends to weigh on the Japanese Yen's safe-haven appeal. 

Meanwhile, the price action clearly suggests that the pair remains on track to extend its up-move ahead of today's US economic releases - ADP report on private sector employment and ISM non-manufacturing PMI. 

The key focus, however, would be on Friday's official jobs report, popularly known as NFP, which should help investors determine the pair's next leg of directional move. 

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet writes: “The trendline sloping downwards from the Feb. 21 high and March 13 high, has met the descending 50-day moving average (MA) at 106.64. A violation there would allow a rally to 107.00 - inverse head and shoulders neckline. The 5, 10, 21 MAs are aligned for a bullish move to 107.00.”