“¢ The US ISM manufacturing PMI falls to the lowest level since October 2016.
“¢ The USD continues to be weighed down by a slump in the US bond yields.
“¢ Upside remains capped as investors await fresh trade-related news/updates.
The USD/JPY pair struggled to capitalize on the intraday recovery from 4-1/2 month lows and remained capped below mid-108.00s post-US ISM PMI.
Slight improvement in the global risk sentiment, as depicted by initial signs of stability in equity markets, dented the Japanese Yen’s safe-haven status and turned out to be one of the key factors behind the pair’s intraday bounce from the 108.00 neighbourhood.
Bullish traders further took cues from rebounding US Treasury bond yields, though the prevailing US Dollar selling bias failed to provide any additional boost, rather kept a lid on any strong follow-through recovery for the major, at least for the time being.
On the economic data front, the US ISM manufacturing PMI fell to 52.1 in May – the lowest Since October 2016, and portrayed a gloomy outlook for the US economy, reinforcing market expectations that the Fed might be forced to cut rates by the end of this year.
Meanwhile, the data did little to provide any meaningful impetus as investors await fresh updates on the trade-related front, which has been a key driver of the broader market risk sentiment and boosting demand for traditional safe-haven currencies – like the Japanese Yen.
Technical outlook
Valeria Bednarik, FXStreet’s own American Chief Analyst writes: “The USD/JPY pair remains depressed as the dollar is out of the market’s favor, short-term poised to continue falling according to the 4 hours chart, as it remains far below strongly bearish moving averages, while technical indicators remain within oversold levels, maintaining their downward slopes. The pair could correct higher only after recovering the 108.60 level, yet the dominant trend favors another leg south.”
Share
