USD/JPY tumbles below 139.50 after US ISM Service PMI

US Dollar weakens across the board following lower-than-expected ISM Service PMI.
US yields decline sharply after data, benefiting the Yen.
USD/JPY extends reversal from six-day highs.

Matías Salord FXStreet

The USD/JPY experienced a sharp drop below 140.00 after the release of US economic data that weighed on the US Dollar. Within a few minutes, the pair lost more than 50 pips, reaching a fresh daily low at 139.25. It remains near the lows, under pressure.

Data triggers more losses in USD/JPY

The May S&P Global Services PMI was revised down from 55.1 to 54.9. More importantly, the ISM Services PMI for May came in at 50.3, the lowest level since May 2020, falling short of expectations of 51.5 and below April's figure of 51.9. The Prices Paid Index also fell from 59.6 to 56.2, and the Employment Index dropped to 49.2, indicating contraction.

In addition, a separate report showed that Factory Orders rose by 0.4% in April, below the market consensus of 0.5%.

These figures triggered weakness in the US Dollar across the board. The US Dollar Index dropped from 104.30, hitting daily lows below 104.00. US Treasury yields also turned negative, with the 10-year sliding from 3.75% to 3.66% and the 2-year from 4.55% to 4.43%.

The rally in Treasuries boosted the Japanese Yen, which is also benefiting from the slide in equity prices on Wall Street. As a result, the yen is one of the top performers so far on Monday.

USD/JPY fails to hold above 140.00

The USD/JPY reached a high of 140.45 on Monday, which was the highest level it had seen since May 30th. However, it began to pull back and accelerated its descent after the release of US data. The pair was unable to maintain a level above 140.00.

On the 4-hour chart, the USD/JPY has fallen below its 20-period Simple Moving Average (SMA). Immediate support is at 139.20, followed by the 138.95/139.00 zone. If the pair continues to decline, attention will turn to last week's low at 138.40. A recovery above 139.60 could alleviate the bearish pressure.

Technical levels

USD/JPY

Overview
Today last price	139.35
Today Daily Change	-0.61
Today Daily Change %	-0.44
Today daily open	139.96

Trends
Daily SMA20	137.86
Daily SMA50	135.32
Daily SMA100	133.96
Daily SMA200	137.29

Levels
Previous Daily High	140.07
Previous Daily Low	138.6
Previous Weekly High	140.93
Previous Weekly Low	138.43
Previous Monthly High	140.93
Previous Monthly Low	133.5
Daily Fibonacci 38.2%	139.51
Daily Fibonacci 61.8%	139.16
Daily Pivot Point S1	139.02
Daily Pivot Point S2	138.08
Daily Pivot Point S3	137.56
Daily Pivot Point R1	140.49
Daily Pivot Point R2	141.01
Daily Pivot Point R3	141.95

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

AUD/USD hangs below mid-0.7100s amid bullish USD, ahead of FOMC meeting

AUD/USD remains on the back foot during the Asian session on Tuesday, close to an over three-week low touched the previous day. US bond yields hold near multi-year highs ahead of the FOMC meeting and oil-driven inflation risks, supporting the US Dollar and weighing on the currency pair. However, rising RBA rate-hike bets could limit deeper losses for the Aussie.

USD/JPY sticks to gains near mid-154.00s as traders await Fed/BoJ meetings

USD/JPY attracts some buyers for the second straight day on Tuesday, though it remains below a one-week high touched the previous day as traders await the FOMC and BoJ meetings this week. Meanwhile, Fed rate-hike bets and oil-driven inflation risks keep US bond yields near multi-year highs, supporting the US Dollar and the currency pair. That said, a more hawkish repricing of the BoJ normalization path might continue to underpin the Japanese Yen and cap spot prices.

Gold seems vulnerable below $4,300 as traders await FOMC meeting

Gold struggles below $4,300 during the Asian session on Tuesday and remains vulnerable near a one-month low, touched the previous day. Fed rate-hike expectations and inflation concerns remain supportive of elevated US bond yields, underpinning the US Dollar and weighing on the non-yielding bullion. Bears, however, might wait for the outcome of a two-day FOMC meeting on Wednesday before placing fresh bets.

Bitcoin pushes past $79K as markets anticipate Fed meeting, Strategy stays put

Bitcoin rose above $79,000 on Monday as the broader crypto market enters a closely watched week for policymakers. According to QCP analysts, markets have largely priced in a 25-basis-point Federal Reserve rate increase after the release of August inflation data last week. The focus has shifted toward how policymakers communicate their outlook for future rate moves.

Eight reasons why the Fed should raise rates

The FOMC meeting on September 15–16 is expected to mark a turning point with the Fed’s first rate hike since May 2023. While there may have been economic reasons to hold off and maintain the status quo until now (some negative signals on the employment front and some encouraging ones on the inflation front), the conditions for a necessary recalibration now appear to be in place.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.