Japanese Yen falls amid strong US manufacturing data

US ISM Manufacturing PMI rose to 54 in May, beating forecasts and supporting the US Dollar.
Iran reportedly halted message exchanges with the US.
Markets now focus on Friday's US Nonfarm Payrolls report.

Agustin Wazne FXStreet

The USD/JPY pair advances toward the 159.70 region, very close to intervention levels near 160.00, on Monday, as the United States Dollar (USD) strengthens following stronger-than-expected manufacturing data, while escalating geopolitical tensions in the Middle East keep market participants cautious.

The latest Institute for Supply Management (ISM) Manufacturing PMI rose to 54 in May from 52.7 in April, beating market expectations of 53 and signaling that business activity in the US manufacturing sector continues to expand at an accelerating pace. The Employment Index improved to 48.6 from 46.4, while the Prices Paid Index eased to 82.1 from 84.6, suggesting inflation remains elevated but has moderated during the month.

Meanwhile, geopolitical risks remain in focus after Iran's Tasnim News Agency reported that Tehran has halted message exchanges with the United States following attacks on Lebanon. The development reduced hopes for near-term diplomatic progress and supported broader safe-haven flows, although the stronger US Dollar continues to underpin USD/JPY.

Looking ahead, traders will closely monitor Friday's US Nonfarm Payrolls (NFP) report for further clues on the health of the labor market.

Short-term technical analysis:

On the 4-hour chart, USD/JPY trades at 159.72, keeping a clear bullish bias as price holds above both the 20-period Simple Moving Average (SMA) at 159.41 and the 100-period SMA at 158.62. The recent grind higher toward the upper 159 handle is underpinned by firm momentum, with the Relative Strength Index (RSI) hovering near 69 and hinting at strong yet increasingly stretched upside pressure.

On the topside, immediate resistance is clustered around 159.73, followed by a nearby barrier at 159.77, where buyers could face profit-taking. On the downside, initial support is seen at 159.48, ahead of a secondary floor at 159.41 that aligns with the 20-period SMA, while a deeper pullback would look to the 100-period SMA near 158.62 as a more significant medium-term demand zone.

(The technical analysis of this story was written with the help of an AI tool.)

Author

Agustin Wazne

FXStreet

Agustin Wazne joined FXStreet as a Junior News Editor, focusing on Commodities and covering Majors.

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