The Japanese Yen declined against the US Dollar, with the USD/JPY pair rising toward the 159.30 level and approaching the psychologically significant 160.00 mark, a threshold that has previously prompted intervention by the Bank of Japan (BoJ) [1]. This move followed the release of the latest S&P Global flash Purchasing Managers Index (PMI) data, which showed the US Composite PMI steady at 51.7 in May, matching April’s reading and indicating ongoing economic expansion [1]. Notably, US Manufacturing PMI improved to 55.3 from 54.5, surpassing market expectations of 54.0, while the Services PMI eased slightly to 50.9 from 51.0, reflecting softer momentum in the service sector [1].
S&P Global commented that business activity continued to grow in May, albeit at a slower rate than earlier in the year, and highlighted that service sector growth remains sluggish with only modest improvements in new business inflows [1]. The stronger-than-expected manufacturing data supported the US Dollar, as traders reassessed the likelihood of Federal Reserve rate cuts [1].
US Treasury Secretary Scott Bessent remarked that both the United States and Japan agree that excessive volatility in currency markets is undesirable, a statement interpreted as indirect support for Tokyo’s recent efforts to stabilize the Yen [1]. Bessent also expressed confidence in BoJ Governor Kazuo Ueda’s ability to guide monetary policy and manage inflation pressures effectively [1].
From a technical perspective, USD/JPY trades at 159.19, maintaining a bullish near-term bias as the price remains above both the 20-period SMA (158.99) and the 100-period SMA (157.82), with the broader uptrend intact [1]. The Relative Strength Index (RSI) is easing toward 68, suggesting that while upside momentum is constructive, the pair is nearing overbought territory, which could slow further gains [1]. Immediate resistance is at 159.19, followed by 159.35, while initial support lies at 159.09 and 158.90, with the 100-period SMA offering deeper support if a pullback occurs [1].
CONCLUSION
The Japanese Yen's decline and the USD/JPY's approach to the 160.00 level reflect strong US manufacturing data and shifting market expectations regarding Fed policy. Official comments from both the US and Japan signal a shared concern over currency volatility, while technical indicators suggest the pair remains in an uptrend but may face resistance ahead. Market participants are closely watching for potential intervention if the Yen weakens further.