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USDJPY In A Tight Margin As the Yen Remains Resilient

USDJPY trades lower in the late morning European session, as the yen rose on support from Monday’s positive Japan PMI reading. The pair was at 150.42 at the time of writing, marginally lower than Monday’s closing price of 150.52. The dollar’s downside is also helped by falling US Treasury yields and growing expectations of interest rate cuts in June.

The Tokyo Core CPI rose year-on-year in February to 2.5% from January’s 1.8%. This latest reading is above the BoJ’s targeted rate of 2.0%.  Also, Japan’s Services PMI fell marginally in February to 52.9 from January’s 53.1, but beat the consensus forecast of 52.5 nonetheless. This will likely give the yen some resilience ahead of the scheduled release of US PMI figures on Tuesday.

USDJPY will get fresh impetus when the US ISM Non-Manufacturing Prices PMI, ISM Non-Manufacturing PMI the S&P Global Services PMI figures come out later Tuesday. The yen sits at a precarious position, considering that there won’t be any data coming out of Japan. However, there’s an element of FUD around the US dollar, after its ISM Manufacturing figure came out below forecasts.

Also, yields on the five-year and the ten-year US Treasury bonds have fallen by more than 3 basis points and are below 4.200% as of this writing. This will add to the downward pressure on the dollar. Furthermore, the USDJPY currency pair will be impacted by the sentiment around the anticipated congressional testimony of Federal Reserve Chairman, Jerome Powell.

Technical analysis

USDJPY pivots at 150.30. The RSI indicator signals neutral momentum, but with a bullish bias. If the buyers take control above 150.30 they could build the momentum to break the 150.70 resistance. Further control beyond that point will put them on course to face the 151.00 psychological mark. In the alternative, the sellers could gain control if action moves under 150.30. That will enable them to attempt to break the 150.05 support. A continuation of control by the sellers could see them test the 149.80 support.