USD/JPY turns flat near 108.50 as markets ignore disappointing PMI data

ISM Non-Manufacturing PMI drops for the third straight month.
US Dollar Index stays in red below 96.
Wall Street trades mixed on Monday.

The USD/JPY extended its rebound in the NA session and was last seen flat on the day at 108.50. Earlier in the day, the pair tested the 108 handle but was able to find support there.

The US Dollar Index, which gauges greenback's value against a basket of six major currencies, slumped to a weekly low of 95.69 in the early NA session. Although today's ISM Non-Manufacturing PMI came in at 57.6 in December to miss the market expectation of 59, the index was able to pull away from its lows amid a recovery seen in the 10-year T-bond yields and was last down 0.4% on the day at 95.80.

Commenting on the PMI report, "ISM services joins manufacturing with a larger than expected drop. It was the third straight monthly decline The services index was lower in July at 55.7 but rebounded to 61.6 in Sept. A China trade deal is key to optimism and first half US GDP," said FXStreet senior analyst Joseph Trevisani.

Meanwhile, major equity indexes in the U.S. started the day on a mixed note and struggle to find direction to reflect a neutral market sentiment as investors are waiting for fresh headlines from the U.S. - China mid-level trade talks that started today.

Technical levels to watch for

The initial support for the pair could be seen at 108 (psychological level/daily low) ahead of 107.50 (Jan. 4 low) and 106.75 (Jan. 3 low). On the upside, resistances are located at 109 (psychological level), 109.65 (Jan. 2 high) and 110.40 (20-DMA).

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