USD/JPY jumps to one-week high amid upbeat US data-inspired USD strength

• USD/JPY turns positive for the third straight day and climbs to a one-week high.
• The upbeat US macro data boost the USD and remains supportive of the move.
• A combination of factors could underpin the JPY and cap the upside for the pair.

The USD/JPY pair catches some bids during the early North American session and climbs to a one-week high in reaction to the upbeat US macro data. The pair is currently placed just above the mid-133.00s and looks to build on this week's recovery move from its lowest level since June 2022.

The US Dollar strengthens across the board following the release of the better-than-expected US ADP report, which, in turn, pushes the USD/JPY pair higher for the third successive day. In fact, the US private-sector employers added 235K jobs in December against consensus estimates for a reading of 150K. Adding to this, Initial Jobless Claims unexpectedly fell from 223K to 204K during the week ended December 30.

This comes on the back of a hawkish assessment of the FOMC meeting minutes released on Wednesday and triggers a sharp intraday spike in the US Treasury bond yields. This, in turn, provides a goodish lift to the Greenback and acts as a tailwind for the USD/JPY pair. Apart from this, technical buying above the 133.00 mark could also be attributed to the latest leg-up witnessed over the past hour or so.

That said, reports that the Bank of Japan (BoJ) plans to raise its inflation forecasts, could underpin the Japanese Yen and cap the upside. Apart from this, the risk-off impulse, which tends to benefit the JPY's relative safe-haven status, might further contribute to keeping a lid on the USD/JPY pair, at least for the time being. This, in turn, warrants some caution for aggressive bullish traders.

Technical levels to watch