USD/JPY pushes lower toward 106 ahead of ADP data

• USD/JPY trades at fresh multi-week lows near 106.10.
• Major European equity indexes trade mixed amid cautious market mood.
• US Dollar Index rises for third straight day ahead of ADP data.

After spending the majority of the day moving sideways near 106.30, the USD/JPY pair lost its traction and touched its lowest level since March 17th at 106.09. As of writing, the pair was down 0.43% on a daily basis at 106.13.

Risk rally softens on Wednesday

Despite the fact that major economies continue to announce measures to ease coronavirus-related lockdowns, the market sentiment remains mixed on Wednesday as investors remain sceptical about a sharp recovery. Germany's DAX 30 and the Euro Stoxx 50 indexes are posting modest losses on the day while the UK's FTSE 100 Index is gaining 0.5% to reflect the cautious mood, which helps the JPY find demand as a safe-haven.

On the other hand, the US Dollar Index is clinging to small daily gains near the 100 mark to help USD/JPY limits its losses for the time being. Later in the session, the ADP Employment Change data from the US will be looked upon for fresh impetus.

Previewing the data, "ADP, America's largest payroll provider, releases its labor figures on Wednesday, with over 20 million job losses expected," said FXStreet analyst Yohay Elam. "It serves as a hint toward Friday's Non-Farm Payrolls."

Technical levels to watch for