FxWirePro: USD/JPY pauses upside at 21-EMA resistance, PMI data awaited for impetus

Chart - Courtesy Trading View 

USD/JPY was trading 0.16% lower on the day at 130.40 at around 04:05 GMT, finds stiff resistance at 21-EMA.

The pair has snapped a two-day bullish streak and has retraced from near 131 levels amid softer yields and mixed Japan PMI data.

Japan’s Jibun Bank Manufacturing PMI for Japan remained unchanged at 48.9 while matching the market forecasts. 

However, the Services counterpart improved to 52.4 versus 51.4 expected and 51.1 prior. 

On the other side, US Conference Board’s Leading Index for December slipped to -1.0% versus -0.7% expected and -1. 1% prior, added weakness to the US Dollar.

Hawkish Bank of Japan’s (BOJ) expectations and the cautious optimism in the market amid easing China COVID-19 woes add to downside pressure.

Further, concerns about a US recession and prospects of a less aggressive Federal Reserve spooked investors away from the greenback.

Looking forward, focus will be on first readings of January’s S&P Global PMIs for the US ahead of US fourth-quarter (Q4) Gross Domestic Product (GDP) later in the week for clear directions.

Major Support Levels: 

S1: 129.53 (5-DMA)

S2: 129.19 (200H MA)

Major Resistance Levels: 

R1: 130.99 (21-EMA)

R2: 131.46 (55-week EMA)

Summary: USD/JPY pivotal at 21-EMA resistance. Major trend is bearish, rejection at 21-EMA will see more downside. On the flip side, decisive break above 21-EMA could change near-term dynamics.