USD/JPY rose to 1111.47, hitting the highest level in six days and then pulled back, trimming gains. Initially the ADP employment report pushed the US dollar to the upside while at the same time weakened the Japanese yen amid a rise in US bond yields. 

The latest round of US data showed an increase in manufacturing activity according to the Makrit PMI and the ISM. But the price index component of the ISM showed an important decline (from 68.5 to 60.5) that offset the positive impact of the report on the US dollar. 

Recently the pair dropped to 111.14 and it was trading at 111.20, still above 111.00 and so far having the best performance since May 18. 

US ISM manufacturing points to ongoing strong growth - ING

US: Manufacturing PMI slips to eight-month low in May - Markit

US: Private-sector employment increased by 253,000 from April to May - ADP

Technical outlook 

“In the 4 hours chart, technical indicators advance within positive territory, but the price remains below its moving averages, limiting chances of a stronger advance. Beyond 111.60, the pair can move up to 112.00, but selling interest will likely surge around this last”, said Valeria Bednarik, Chief Analyst at FXStreet.

On the downside, a decline under 111.00, where the 20-hour moving average stands, could remove strength out of the US dollar favoring an extension of the retreat, exposing daily lows.