USD/JPY retreats from multi-week highs toward 110.00 after ADP data

• USD/JPY lost its traction in early American session.
• US Dollar Index edges lower toward 92.50 after disappointing ADP data.
• Investors await IHS Markit's and ISM's Manufacturing PMI reports.

The USD/JPY pair rose to its highest level since August 13 at 110.42 on Wednesday but reversed its direction in the early trading hours of the American session. As of writing, the pair was still up 0.12% on the day at 110.15.

DXY turns south after US employment data

The renewed USD weakness seems to be causing USD/JPY to edge lower in the second half of the day. The data published by the monthly data published by the Automatic Data Processing (ADP) Research Institute showed on Wednesday that the private sector employment in the US increased by 347,000 in August. This reading missed the market expectation of 613,000 by a wide margin and triggered a USD selloff. Additionally, July's print got revised down to 326,000 from 330,000.

Currently, the US Dollar Index is down 0.15% on the day at 92.50. Later in the session, the IHS Markit's and the ISM's Manufacturing PMI reports for August will be watched closely by market participants.

In the meantime, Wall Street's main indexes remain on track to open in the positive territory despite the dismal ADP data, suggesting that risk flows could help USD/JPY limit its losses in the remainder of the day.

Technical levels to watch for