USD/JPY Price Analysis: Loses traction above the 145.60 area, eyes on the US PMI data

• USD/JPY currently trades near 145.62, losing 0.19% on the day.
• The immediate resistance level for USD/JPY appears at 145.85; the initial contention is located at 145.30.
• The Relative Strength Index (RSI) stands in bearish territory below 50.

The USD/JPY loses momentum but holds above the 145.60 mark heading into the early European session on Wednesday. Markets turn cautious ahead of the US S&P Global PMI data due later in the North American session. The major pair currently trades near 145.62, losing 0.19% on the day.

Japan's manufacturing shrank for a third straight month in August, according to the latest figures released on Wednesday. Jibun Bank's flash PMI reading for Japan's manufacturing sector in August showed a rise to 49.7 from 49.6. The figure was under the predicted 49.5. While the Service PMI increased from 53.8 to 54.3.

Technically, the USD/JPY pair stands above the 50- and 100-hour Exponential Moving Averages (EMAs) with an upward slope, which means the path of least resistance is to the upside for the major pair.

The immediate resistance level for USD/JPY appears at 145.85 (a high of August 15). The additional upside filter to watch is seen at a high of August 21 and the upper boundary of the Bollinger Band of 146.35. Any meaningful follow-through buying above the latter would challenge a Year-To-Date (YTD) high of 146.55. Further north, at 147.00 will be a tough nut to crack for the USD/JPY pair.

On the flip side, the initial contention for the major pair is located at 145.30 (50-hour EMA). The next contention level emerges near a psychological round figure at 145.00. Any intraday pullback below the latter would expose the next downside stop at 144.45 (100-hour EMA) en route to 144.00 (round mark), and finally at 143.30 (low of August 10).

It’s worth noting that the Relative Strength Index (RSI) stands in bearish territory below 50, which indicates that the downside momentum has been activated for the time being.

USD/JPY four-hour chart