USD/JPY jumps above 143.00 following US data

• USD/JPY tallies a third consecutive day of gains near rising near the 143.30 area, displaying 0.70% gains.
• ISM Manufacturing PMI accelerated in July but was lower than expected. JOLTs data also fail to live up to expectations.
• USD trades strong agains most of its rivals ahead of crucial labour market data.

On Tuesday, the USD traded with gains agains most of its rivals, including the EUR, GBP and JPY, following the release of mid-tier economic data. On the other hand, the JPY continues to weaken amid the Bank of Japan’s (BoJ) dovish stance.

US Manufacturing sector remains resilient, while the labour market hinted at some softness

The Institute for Supply Management (ISM) from the US released its July PMI, which came in at 46.4 vs the 46.8 expected but higher than the previous 46 reading. On the other hand, the June JOLTs Job Openings, which captures job vacancies, came in at 9.58M vs the 9.62M expected and the previous 9.82M. It's worth noting that Federal Reserve (Fed) Chairman Jerome Powell pointed out that the economy is resilient and the labour market “tight”, confirming that future decisions will depend on incoming data. In that sense, the USD price dynamics will face volatility in the outcome of the economic data unit at the next September meeting as market participants will place bets on the outcome of the incoming economic figures.

That said, ADP job employment change figures on Wednesday, Jobless Claims on Thursday, and the Nonfarm Payrolls (NFP) on Friday will be closely watched.

Regarding the following Federal Reserve monetary policy decisions, tightening expectations remain steady. According to the CME FedWatch tool, markets are currently pricing in a 20% chance of a 25 bps hike in the September meeting and 29% odds of a 25 bps hike in November.

On the Japanese side, due to the Bank of Japan's (BoJ) dovish stance and limited flexibility in their Yield Control Curve (YCC), the JPY is losing ground against other currencies. The BoJ has no plans to normalise monetary policy as inflation remains below its estimates. Meanwhile, other central banks like the Federal Reserve, European Central Bank, and Bank of England have divergent economic policies that could further weaken the Yen.

USD/JPY Levels to watch

With Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) comfortably placed in positive territory on the daily chart, the USD/JPY buyers hold the upperhand. The upwards slope of the Relative Strength Index (RSI) further reinforces this positive sentiment, as does the MACD, which displays green bars, indicating a strengthening bullish momentum. On the other hand, the pair is above the 20,100,200-day SMAs, suggesting that the bears are struggling to challenge the overall bullish trend.

Resistance levels: 143.50, 144.00, 144.50.
Support levels: 142.30,140.80 (20-day SMA), 140.00.