USD/JPY sees a downside to near 134.00 as investors await US Services PMI

USD/JPY is likely to drag to near 134.00 as investors have turned precautionary ahead of US Services PMI data.
Fed’s Evans has favored a higher interest rate peak despite a slowdown in the rate hike pace.
An upbeat US Services New Orders Index data could propel short-term inflation expectations.

Sagar Dua FXStreet

The USD/JPY pair has attempted a break above the immediate hurdle of 134.50 in the Tokyo session. The asset is expected to remain on the tenterhooks as investors await United States Services PMI data for fresh impetus. The risk profile is still optimistic as Federal Reserve (Fed) policymakers don’t call for continuing the current interest rate hike pace.

Chicago Fed President Charles Evans said on Friday, "We are probably going to have a slightly higher peak to Fed policy rate even as we slow pace of rate hikes," as reported by Reuters.

The US Dollar Index (DXY) is hovering around its immediate support of 104.50 and is looking to test Friday’s low around 104.40. The risk appetite theme is likely to keep hammering the US Dollar bulls amid a significant decline in safe-haven appeal.

Meanwhile, 10-year US Treasury yields have rebounded after dropping below 3.50% in the Asian session as the market mood is turning precautionary ahead of the US Services PMI data. Per the projections, the economic data is seen at 55.6, lower than the prior release of 54.4.

In the US Services PMI gamut, the New Orders Index is seen solid at 58.5 against the former release of 56.5. This indicates robust demand ahead, which could de-anchored short-term inflation expectations and, henceforth, ruin the risk-on profile.

On the Tokyo front, Bank of Japan (BOJ) Governor Haruhiko Kuroda highlighted the risk of a slowdown in inflation from CY2023. This may propel the BOJ to continue with policy easing in order to keep inflation near the targeted rate of 2%. Going forward, the Overall Household Spending data will be of utmost importance. The economic data is expected to improve to 3.4% from the prior release of 2.3% on an annual basis.

USD/JPY

Overview
Today last price	134.63
Today Daily Change	0.32
Today Daily Change %	0.24
Today daily open	134.31

Trends
Daily SMA20	140.16
Daily SMA50	144.14
Daily SMA100	141.14
Daily SMA200	134.51

Levels
Previous Daily High	135.98
Previous Daily Low	133.62
Previous Weekly High	139.9
Previous Weekly Low	133.62
Previous Monthly High	148.82
Previous Monthly Low	137.5
Daily Fibonacci 38.2%	134.52
Daily Fibonacci 61.8%	135.08
Daily Pivot Point S1	133.29
Daily Pivot Point S2	132.28
Daily Pivot Point S3	130.93
Daily Pivot Point R1	135.65
Daily Pivot Point R2	137
Daily Pivot Point R3	138.01

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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