Created
: 2025.06.04
2025.06.04 11:36
The Japanese Yen (JPY) attracts some intraday buyers following an Asian session downtick against its American counterpart and for now, seems to have stalled its pullback from a one-week high touched the previous day. An upward revision of Japan's Services PMI, along with expectations that higher wages will boost inflation, keeps the door open for another interest rate hike by the Bank of Japan (BoJ) in 2025. Apart from this, persistent geopolitical risks and trade uncertainties turn out to be key factors underpinning the JPY.
Meanwhile, BoJ Governor Kazuo Ueda's cautious remarks on Tuesday fueled speculations that the next interest rate hike won't come soon. Nevertheless, this still marks a big divergence in comparison to expectations that the Federal Reserve (Fed) would deliver at least two 25 basis points (bps) rate cuts by the end of this year. This, along with US fiscal concerns, prompts fresh US Dollar (USD) selling, following Tuesday's goodish bounce from a six-week low, and exerts some pressure on the USD/JPY pair during the Asian session.
Technical indicators on the daily chart have been recovering and have just started gaining positive traction on the 4-hour chart. This, in turn, favors the USD/JPY bulls, though an intraday failure to find acceptance above the 200-period Simple Moving Average (SMA) warrants some caution. Hence, it will be prudent to wait for some follow-through buying beyond the Asian session peak, around the 144.30 area before positioning for any further appreciating move. Spot prices might then aim to reclaim the 145.00 psychological mark, with some intermediate hurdle near the 144.75-144.80 region.
On the flip side, the 143.50-143.45 area now seems to act as immediate support, below which the USD/JPY pair could slide to the 143.00 round figure. Follow-through selling would drag spot prices to the 142.40-142.35 region, or the weekly trough set on Tuesday, en route to the 142.10 area, or the May monthly swing low touched last week.
The Services Purchasing Managers Index (PMI), released on a monthly basis by Jibun Bank and S&P Global, is a leading indicator gauging business activity in Japan's services sector. As the services sector dominates a large part of total GDP, the services PMI is an important indicator of the overall economic conditions in Japan. The data is derived from surveys of senior executives at private-sector companies from the services sector. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), employment and inflation. A reading above 50 indicates that the services economy is generally expanding, a bullish sign for the Japanese Yen (JPY). Meanwhile, a reading below 50 signals that activity among service providers is generally declining, which is seen as bearish for JPY.
Read more.Last release: Wed Jun 04, 2025 00:30
Frequency: Monthly
Actual: 51
Consensus: 50.8
Previous: 50.8
Source: S&P Global
Created
: 2025.06.04
Last updated
: 2025.06.04
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