USD/JPY remains on the defensive near 130.00 post-US ADP report, FOMC decision awaited

• USD/JPY extended its sideways consolidative price move for the third straight day on Wednesday.
• The disappointing US ADP report failed to impress or provide any meaningful impetus to the major.
• The market focus remains glued firmly to the highly-anticipated FOMC monetary policy decision.

The USD/JPY pair traded with a mild negative bias through the early North American session and was seen hovering around the 130.00 psychological mark following the release of the US ADP report.

The Automatic Data Processing (ADP) reported that the US private-sector employers added 247K new jobs in April, missing consensus estimates pointing to the 395K increase. This, however, was offset by an upward revision of the previous month's reading to 479K from 455K and did little to impress traders or provide any meaningful impetus to the USD/JPY pair.

Looking at the broader picture, spot prices have been oscillating in a range since the beginning of this week as investors await a fresh catalyst before positioning for the next leg of a directional move. Hence, the focus will remain glued to the outcome of a two-day FOMC monetary policy meeting, scheduled to be announced later during the US session on Wednesday.

The US central bank is widely expected to raise benchmark interest rates by 50 bps and lay down its plans to start shrinking its massive, near $9 trillion balance sheet. The anticipated move, however, is fully priced in the markets, suggesting that investors will look for cues to see if the Fed is ready to hike rates further even if the economy weakens.

Apart from this, investors will also scrutinize Fed Chair Jerome Powell's comments at the post-meeting press conference for additional hints about the policy tightening path. This, in turn, will play a key role in influencing the near-term USD price dynamics and help investors to determine the near-term trajectory for the USD/JPY pair.

Nevertheless, the big Fed-BoJ monetary policy divergence favour bullish traders and supports prospects for an extension of the USD/JPY pair's strong uptrend witnessed over the past two months or so. Wednesday's economic docket also highlights the release of the ISM Services PMI, though would fail to produce any meaningful trading opportunities.

Technical levels to watch