USD/JPY trades at pre-NFP levels after initial reaction

Following the knee-jerk drop to 113.50 after the NFP report, the USD/JPY pair gathered momentum and recovered its losses quickly. At the moment, the pair is trading at 113.72, up 0.43% on the day.

Today's data from the U.S. showed that the total nonfarm employment increased by 222,000 in June, beating the market expectation of 179,000. However, the rising unemployment rate (from 4.3% to 4.4%) coupled with the unchanged hourly earning readings (0.2% vs. 0.3% expected) countered the potential positive impact of the data on the greenback. After dropping to a session low at 95.53 in a matter of minutes, the US Dollar Index erased a portion of its losses and is now at 95.67, still up 0.08% on the day.

• US: Total nonfarm payroll employment increased by 222,000 in June

Now with the NFP out of the way, investors will be focused on the Fed's Monetary Policy Report at 15:00 GMT and look for a fresh catalyst. 

Technical outlook

112.65 (200-DMA) level continues to provide a strong support for the pair. With a decisive break below that dynamic level, the pair could aim for 112.00 (psychological level) and 111.35 (100-DMA). On the upside, resistances align at 114.00 (psychological level), 114.35 (May 10 high) and 115 (psychological level).