USD/JPY jumps 30-pips from daily lows up to 114.80 post-positive US ISM report

• The USD continues losing against the safe-haven status of the Japanese yen, 0.26%.
• US ISM PMI Manufacturing Price Index jumped to 78.1 from 68.1.
• USD/JPY is upward biased, despite the 1% drop since last week’s Friday.

During the New York session, the USD/JPY extends to three days its losses, dips 0.26%. At press time, the pair is trading at 114.78, up from 114.56, after a better than expected US ISM Manufacturing report. Market sentiment is mixed. European equity indices rise, while US stock indices fall post-ISM.

In the meantime, the US 10-year Treasury yield edges up two basis points sits at 1.804% post-US ISM.

US ISM Manufacturing came better than expected

On Tuesday, the Institute for Supply Management (ISM) reported the Manufacturing PMI Index for January. The figures at 57.6, better than the 57.5 foreseen, showed that the US economy continues expanding. However, the Manufacturing Prices Index smashed forecasts, climbing to 76.1 from 68.1 estimated, further cementing Fed rate hikes in 2022.

Some minutes before the ISM PMI, the IHS Markit Manufacturing PMI came at 55.5, slightly up than the 55.0 estimated.

Fed speaking continues with regional Presidents, led by Philadelphia’s Harker, followed by St. Louis Bullard at 19:30 GMT

In the meantime, before the North American session began, the Philadelphia Fed President Patrick Harker crossed the wires. Harker commented that the Fed is not behind the curve, and he expects a rate hike of 25 basis points, four in the year. Concerning the balance sheet reduction, he said that the US central bank could begin the Quantitative Tightening (QT) once the Federal Funds Rates (FFR) hit 1% to 1.25%.

USD/JPY Price Forecast:  Technical outlook

The USD/JPY is upward biased despite solid resistance around the 115.50-70 area, courtesy of a five-month-old upslope trendline previous support-turned-resistance. A breach of the latter would expose the YTD high at 116.35, followed by January 3, 2017, high at 118.61.

On the flip side, the USD/JPY first support level would be January 27 daily low at 114.47, followed by the 50-day moving average (DMA) at 114.33 and then 114.00.