FxWirePro: USD/JPY holds marginal gains ahead of US ISM PMI data

Chart - Courtesy Trading View 

USD/JPY was trading 0.65% higher on the day at 133.56 at around 07:15 GMT, holds above 21-EMA and daily cloud. 

BoJ minutes from the January meeting showed members reiterated the need to maintain a dovish stance, as it takes time to reach the 2% inflation target in a sustainable and stable manner.

On the data front, Japan’s business sentiment tumbled to an over 2-year low in Q1 as the banking crisis in the US and Europe added to uncertainty over already slowing global growth.

Focus now on a slew of U.S. economic readings this week for more cues on the Fed monetary policy.

US manufacturing activity data for March, due later on Monday is expected to show that the U.S. manufacturing sector remained in contraction territory for a fifth straight month. 

US ISM Manufacturing PMI (March) is expected to show a marginal drop to 47.5 from the former release of 47.7. 

Major focus will be nonfarm payrolls data for March, due on Thursday. Traders will be watching for signs of weakness in the labor market, which could open the path for a less hawkish Fed. 

Support levels - 132.86 (21-EMA), 132.51 (5-DMA)

Resistance levels - 134.08 (21-week EMA), 134.39 (110-EMA)

Summary: USD/JPY holds break above 21-EMA and daily cloud support. Technical bias for the pair is bullish. Scope for further gains. Retrace below cloud negates any further upside.