SD/JPY gains momentum, targeting 150.00 resistance. Robust US data fuels dollar's rise, diminishing Fed rate cut prospects. Bulls dominate, with 146.20 as key bearish pivot.
According to the results of the Economic Calendar data, the ISM Services Purchasing Managers’ Index reading in the United States of America for January came at 53.4, up from a reading of 50.5 in December and exceeding estimates of 52. In a significant improvement, the employment index in the survey rose to a reading of 50.5 from a reading of 42.8, confirming the markets’ The American Labor market is in good health. Commenting on the results and reaction, Dominic Bonning, head of currency research at HSBC Bank, said, “The price of the US dollar is rising after another set of strong data. Also, “After a much higher-than-expected nonfarm payrolls report on Friday, today’s ISM Services Survey also beat expectations, with stronger data across almost all subcomponents.”
Moreover, this economic data comes on the heels of the US Non-Farm Payrolls report on Friday which blew away estimates and eliminated the prospects of a US interest rate cut in March by the Federal Reserve.
The price of the US dollar rose following the release of data on Friday, and the strong ISM reading on Monday, which confirmed that the non-farm payrolls report was not an anomaly, provided strong positive momentum for the US dollar. Looking ahead, HSBC says it will be difficult to stop the dollar's strength. He stated, “The continued strength of the US economy compared to most of its peers in the G10 currencies is one of the main reasons why we have adopted a contrarian bullish view on the US dollar since September 2023.”
The strength of the US data indicates that there is no good reason for the US Federal Reserve to cut interest rates in the foreseeable future, which could help support US bond yields and the dollar. According to analysts, “As such, we see that interest pricing in the United States of America is more inclined to the upward trend than to the downward trend at the present time.” Meanwhile, the US dollar has already broken out of its recent ranges and is at its highest levels since November of last year using the DXY US dollar scale. If the current economic momentum continues, there is little reason to believe that we will see a reversal of the weak side anytime soon.
USD/JPY Technical Analysis and Expectations Today:
As we mentioned before, the success of the bulls in pushing the price of the currency pair US Dollar against the Japanese Yen “USD/JPY” above the resistance of 148.60 will increase expectations of the imminent transition to the psychological resistance of 150.00. therefore, which in turn confirms the strength of the bulls’ control and will also move the technical indicators towards strong levels of saturation for buying. The discrepancy in the future of central bank policy tightening and economic performance remains in favour of further strength of the US dollar. Prior to the recent rebound, we often recommended buying the USD/JPY pair from every falling level. On the other hand, according to the performance on the daily chart below, the direction of the currency pair will not change to bearish without moving towards the support level of 146.20 again.
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