- Summary:
- As the US ISM Non-Manufacturing PMI data is released today, the USDJPY may experience further volatility in New York trading.
The US ISM Non-Manufacturing PMI number hits the newswires today at 2pm GMT, and will have implications for the USDJPY. The pair is down 135 pips since Tuesday’s release of the ISM Manufacturing PMI, which was worse than expected. A lackluster ADP Employment Change did nothing to improve the fortunes of the USDJPY. Risk-off sentiment ensued, putting the pair on offer throughout yesterday.
The USDJPY will be in focus today as the key data that measures the economic conditions in the services sector in the US hits the markets. The big question is whether the US-China trade war has started to hurt the US services sector or not?
Polled economists think that the US ISM Non-Manufacturing PMI will come in at 55.1, which is a slightly lower figure than last month’s 56.4. Here’s how to trade this currency pair on this economic indicator.
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Technical Play for USDJPY
Again, it is all about the numbers, the deviation and the prevailing market sentiment. Market sentiment is bearish as safe haven trading took over, sending the USDJPY into further decline. The pair has paused at the support level formed by the June 25 and September 25 lows (the neckline of a potential double top on the daily chart).
The deviation between the expected and the previous figure is 1.3. If the US ISM Non-Manufacturing PMI comes in at any figure less than 53.8, this is a USD-negative situation and could produce further downside on the USDJPY. This would mount a serious downside challenge to the neckline support and put the pair on offer heading into tomorrow’s NFP.
If the economic indicator comes in at any figure higher than 56.4, this is USD-positive and we could have a recovery in the pair heading into tomorrow’s big news.
Key levels to watch are as follows:
- the neckline support at 106.86. A downside break would open the door to the Aug 13 lows at 105.25.
- the 108.40 price level (double top area) at the 50% Fibonacci line (highs of July 1 and 2). A break above this area would invalidate the potentially bearish setup on the chart.