USD/JPY glued nearby 136.00 subdued after US ISM PMI data

USD/JPY failed to gain traction, despite rising US Treasury bond yields.
Federal Reserve officials are still expecting rates at around 5.25%, according to December’s 2022 dot-plots.
Manufacturing activity in the United States remains depressed, though a jump in input prices keeps traders worried about further Fed tightening.

Christian Borjon Valencia FXStreet

The USD/JPY remains pressured, though capped by recent US economic data, as the US ISM Manufacturing PMI for February fell short of estimates. However, some subcomponents show that again prices are rising. The USD/JPY is exchanging hands at 136.08.

USD/JPY continues to consolidate after mixed US ISM Manufacturing PMI

US equities are trading mixed after the release of the ISM. The reading came at 47.7, below estimates of 48 for February, meaning that factories still feel the impact of the Federal Reserve’s (Fed) aggression. Delving into the report, the Prices Index rose to 51.3, past the 45.1 estimates, spurring a knee-jerk reaction in the US Dollar Index (DXY), and the USD/JPY spiked to 136.31.

Lately, investors have turned less optimistic about inflation in the United States (US). Money market futures are pricing the Federal Funds Rate (FFR) at around 5.25% -5.50% by June 2023, and no rate cuts throughout the year.

Earlier, S&P Global Manufacturing PMI for the US came shorter than the prior’s month data, at 47.3 vs. 47.8, a prelude of what was coming, later with data released by the ISM.

Federal Reserve officials insist on their hawkish rhetoric led by Neil Kashkari, President of the Federal Reserve Bank of Minneapolis. He said interest rates should reach 5.4% in December and stay at that level. He also mentioned that he would consider increasing rates by either 25 or 50 basis points during the upcoming Fed meeting and added that the dangers associated with not tightening monetary policy are greater than those of tightening it too much.

Contrarily, Atlanta’s Fed President Raphael Bostic believed that rates need to go as high as 5% - 5.25% and stood there “well into 2024.” He added that the economy has the momentum to support higher rates without a major downturn.

Despite the hawkishness provided by Kashkari, the USD/JPY failed to edge higher. Additionally, rising UST yields, like the 10-year benchmark note rate, approach the 4% threshold, but sentiment keeps USD/JPY traders on the sidelines, waiting for additional US economic data.

USD/JPY Technical analysis

The USD/JPY daily chart shows the major consolidating at around 136.00. Back-to-back doji’s in the daily time frame suggest that buyers and sellers are at equilibrium. The Relative Strength Index (RSI) is almost flat but nearby overbought conditions, while the Rate of Change (RoC) indicates sellers are gathering momentum.

For a bullish resumption, the USD/JPY must clear the YTD high of 136.91, so the pair might test 138.00. Otherwise, a fall below 135.25 would pave the way toward 135.00.

What to watch?

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

AUD/USD: Recovery appears capped by 0.7000

AUD/USD has reversed a multi-day positive streak, briefly revisiting the 0.6940 region before trimming part of those gains to end the day modestly on the back foot. The better tone in the Greenback has kept the pair under pressure, which has so far met decent contention in the vicinity of the 0.6900 zone. Moving forward, the Melbourne Institute’s Consumer Inflation Expectations is next on tap in Oz.

USD/JPY holds firm near 158.50 ahead of Fed Minutes

USD/JPY hangs close to a one-and-a-half-week high near 158.50 in the Asian session on Wednesday, with bulls now awaiting a move beyond the 200-day SMA hurdle before positioning for further gains ahead of the FOMC Minutes. Meanwhile, a fresh leg up in US bond yields revives US Dollar demand amid geopolitical uncertainties, boosting the pair amid dovish BoJ commentary.

Gold falls to two‑month low near $4,100 on stronger US Dollar

Gold price tumbles to a near two-month low around $4,110 during the early Asian session on Thursday. A stronger US Dollar and elevated US Treasury bond yields reduce the appeal of the non-yielding metal. Traders will take more cues from the speeches of Federal Reserve officials, including Christopher Waller and Alberto Musalem.

Ethereum drops below $2,600 as Tom Lee says BitMine will end buying spree

Ethereum (ETH) treasury firm BitMine Immersion (BMNR) will halt its weekly accumulation of the top altcoin over the next few months. BitMine Chairman Thomas Lee, speaking at the Token2049 conference in Singapore, said that the company will stop buying when its stash reaches 5% of ETH's circulating supply. He noted that BitMine will reach that threshold if it acquires an additional 100,000 ETH.

The US 10-year just hit a 2002 high. Does it give the US Dollar its next leg?

In 2026, the US Dollar Index, which measures the Dollar against six major currencies, has risen on days when Federal Reserve rate expectations pushed Treasury yields up and barely moved on days when something else did. The last stretch of the 10-year yield's climb to its highest since 2002 was the second kind.

The UK 30-year gilt just hit a 1998 high. Is that good or bad for the British Pound?

The yield on the UK's 30-year government bond, or gilt, went through 6% on October 1 for the first time since early 1998, and on Monday the Pound was at its strongest against the Euro since June 2025. The gilt market's 28-year high is mostly someone else's. Since early May, the 30-year gilt yield has risen about 0.15 of a percentage point and the US 30-year about 0.7.