Japanese Yen steadies near 40-year low amid mixed US data

The USD/JPY pair trades without a clear direction near 162.50 on Wednesday as investors digest mixed United States (US) economic data and persistent pressure on the Japanese Yen (JPY). The Yen remains close to its lowest level in the last 40 years even as data pointed to some resilience in Japan's manufacturing sector.

In the US, the ISM Manufacturing PMI eased to 53.3 in June from 54 in May, missing expectations for an unchanged reading. Still, the index remained above the 50 threshold, showing that factory activity continued to expand. New Orders slipped to 56, while the Prices Paid Index fell to 73 from 82.1, suggesting that price pressures cooled but remained elevated.

The US Dollar (USD) initially found support as manufacturing activity remained in expansion territory. However, gains were capped after the ADP National Employment Report showed that private payrolls rose by 98K in June, below expectations of 113K and down from May’s 122K. The softer ADP reading added caution ahead of the official US Nonfarm Payrolls report due on Thursday, as investors assess whether the labor market is cooling enough to influence the Fed’s policy outlook.

On the Japanese side, the Yen remains under pressure despite growing signs that the Bank of Japan (BoJ) could continue normalizing policy. Japan’s latest Tankan Large Manufacturing Index in Q2 improved to its highest level in eight years, while firms’ inflation expectations stayed above the BoJ’s 2% target, supporting the case for further rate hikes later this year.

Short-term technical analysis:

On the 4-hour chart, USD/JPY trades at 162.49, holding a bullish bias as it stays above the 20-period Simple Moving Average (SMA) near 162.21 and the 100-period SMA around 161.16. The cluster of nearby supports under price suggests dips remain shallow for now, while the Relative Strength Index (RSI) around 63 stays in positive territory, hinting that upside momentum is still constructive though no longer in extreme overbought conditions.

On the topside, initial resistance emerges at 162.57, with a stronger barrier just above at 162.77, where sellers could attempt to cap further gains. On the downside, immediate support is seen at 162.41, ahead of the horizontal level at 162.29; a deeper pullback would look toward the 20-period SMA around 162.21, with the 100-period SMA near 161.16 acting as a more distant bullish line in the sand.

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