The USD received a boost from strong US PMIs, causing Treasury yields to rise and reducing the likelihood of a rate cut in September to about 60%. Despite some concerns about inflation, overall the PMIs were positive for economic growth.
The trend for the USDJPY pair is expected to remain bullish, with both US data and market drivers supporting further upside movement. Only if the US economy shows signs of entering a recession would we likely see a shift in this trend.
Meanwhile, the Yen did not benefit from domestic data as inflation continued to decline, making a rate hike from the Bank of Japan unlikely.
On the daily chart, USDJPY broke through a key level at 156.80, signaling a potential rally towards 158.00 and possibly up to 160.00. However, we may see resistance at the intervention level, leading to a pullback.
On the 1-hour chart, a strong support level is seen around 156.80, with potential for a rally towards 158.00 if the trendline holds. Buyers may also enter if the price breaks above 157.20. Sellers will look for a break below 156.80 to invalidate the bullish setup.
With no major catalysts expected today, the market is likely to continue trading based on yesterday’s US PMI data.