USD/JPY jumps towards 132.00 after US data, awaiting FOMC Minutes

• The dollar regains strength after the US data.
• The US ISM manufacturing index falls to 48.4 compared to 48.5 of the market consensus.
• USD/JPY jumps after the report; the focus is on the FOMC Minutes.

The USD/JPY pair went from trading below 131.00 to 131.90, reaching its highest level since December 30, after the release of the ISM US manufacturing index and awaiting the FOMC minutes. The strong rebound in US yields weighed on the Japanese yen.

The dollar cut losses

The DXY is down just 0.35% and trades at 104.30 after trading below 104.00 a few hours ago. The rebound accelerated after the latest round of US economic data. By contrast, the yen weakened on rising US bond yields. The 10-year US bond yield rose from a six-day low of 3.67% to 3.71%.

The ISM manufacturing report showed that business activity in the manufacturing sector contracted for the second straight month in December. The main index dipped to 48.4 from November’s 49 and below the market consensus of 48.5. The employment index rose to 51.4, beating expectations. The Prices Paid index fell from 43 to 39.4, another sign of slowing inflation.

The Federal Reserve will publish the minutes of the last FOMC meeting at 19:00 GMT. The document will be scrutinized for signs on the future path of monetary policy. The ADP employment report will be released on Thursday and the NFP on Friday.

USD/JPY attentive to 132.00

USD/JPY is breaking and holding above 131.30/50, a positive development for bulls. The pair is now at 132.00. Above the next relevant barrier is seen at the 132.30 area. A pullback below 131.

00 should suggest that the bearish pressure is still intact and that the bullish correction is over. A consolidation below 130.00 is needed to clear the way for further losses.

technical levels