- US data sends US yields higher boosting the greenback against the yen.
- Yen remains among the worst performers as global markets rise.
The USD/JPY was correcting lower from the 111.17 (Asian session high), it bottomed at 110.79 after US retail sales data and then jumped quickly back above 111.00 supported by the ISM report. Recently peaked at 111.31, the highest level since March 20.
It was holding near the top with the bullish tone intact. The ISM Manufacturing Index improved in March to 55.3, above the 54.2. The data offset the negative tone of the retail sales report released earlier and boosted the greenback across the board. On the negative front the JP Morgan Global Manufacturing PMI was unchanged from February “and signalled a further lacklustre improvement in operating conditions in the global manufacturing economy”, said the report that showed global manufacturing growth remains weak in March supporting concerns about the growth outlook.
Despite today’s data, the yen continues to be among the worst performers. During the Asian session, Chinese data triggered a rally in equity markets. More recently, after the latest round of US data, US yields turned sharply higher. The 10-year climbed from 2.45% to 2.48%, the highest since March 22 supporting further gains in USD/JPY.
Levels to watch
The USD/JPY stands at 111.25/30, at weekly highs and also on top of the 20-day moving average 111.05, now the immediate support. The US dollar also broke a downtrend line in the short-term adding to the bullish bias. The next resistance level might be seen around 111.50, followed by 111.70 (Mar 20 high).
A retreat back under 110.85 would change the short-term tone in favor of the downside. Below the next strong support lies at 110.70 and then 110.40.
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