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  • ISM Non-Manufacturing PMI beats expectations.
  • Economic Optimism Index posts its largest monthly  increase in more than 6 years.
  • US Dollar Index tests 97 handle  on the back of upbeat data.

Following a failed attempt to break above the 112 mark earlier in the day, the USD/JPY gained traction in the last hour and rose to its highest level since December 20 at 112.15. As of writing, the pair was trading at 112.06, adding 0.28% on a daily basis.

A new wave of USD-buying in the last hour seems to be fueling the pair’s upsurge in the NA session. The ISM’s Non-Manufacturing PMI rose to 59.7 in February from 56.7 in January to beat the analysts’ estimate of 57.3. Moreover, new home sales increased by 3.7% compared to the market expectation for an 8.7% contraction, and the IBD/TIPP Economic Optimism Index improved to 55.7 in March from 50.3 in February to post its largest monthly jump since 2012.

Boosted by the upbeat data, the US Dollar Index touched the 97 handle for the first time since February 19. Additionally, major equity indexes in the U.S. pared their early losses to suggest that the risk appetite is returning to markets, which makes it difficult for the JPY to show resilience against the buck.

There won’t be any other macroeconomic data releases in the remainder of the day and the USD’s market valuation is likely to continue to dominate the pair’s price action.

Key technical levels

With a daily close above 112 (psychological level/daily high), the pair could target 112.60 (Dec. 20, 2018, high) and 113.35 (Dec. 10, 2018, high).  On the downside, supports are located at 111.50 (200-DMA), 111 (100-DMA) and 110.35 (Feb. 27 low).