The Japanese Yen declined against the US Dollar on Monday, with the USD/JPY pair advancing toward the 159.70 region, approaching the critical intervention threshold near 160.00. This movement was driven by a stronger US Dollar following the release of robust US manufacturing data and heightened geopolitical tensions in the Middle East, which kept market participants cautious [1].
The Institute for Supply Management (ISM) Manufacturing PMI for May rose to 54, up from 52.7 in April and surpassing market expectations of 53. This indicates that business activity in the US manufacturing sector is expanding at an accelerating pace. Additionally, the Employment Index improved to 48.6 from 46.4, while the Prices Paid Index eased to 82.1 from 84.6, suggesting that inflation remains elevated but has moderated during the month [1].
Geopolitical risks also influenced market sentiment, as Iran's Tasnim News Agency reported that Tehran has halted message exchanges with the United States following attacks on Lebanon. This development reduced hopes for near-term diplomatic progress and supported broader safe-haven flows, although the stronger US Dollar continued to underpin the USD/JPY pair [1].
Looking ahead, traders are expected to closely monitor Friday's US Nonfarm Payrolls (NFP) report for further insights into the health of the US labor market. Technical analysis shows USD/JPY trading at 159.72 with a clear bullish bias, supported by firm momentum and the price holding above key moving averages. Immediate resistance is noted at 159.73 and 159.77, while support levels are seen at 159.48, 159.41, and 158.62 [1].
CONCLUSION
The Japanese Yen's decline against the US Dollar was fueled by stronger-than-expected US manufacturing data and ongoing geopolitical tensions. With USD/JPY nearing intervention levels, market participants remain focused on upcoming US labor data for further direction. The current technical setup suggests continued upside pressure in the near term.