The US dollar achieves new yearly price peak against the yen

Economic data affecting movements in the USD/JPY pair

Continuing the series of increases seen by the US dollar index against most currencies and commodities, the US dollar started today's trading session with a slight increase against the Japanese yen, with the pair trading near the 138.62 level. This is noteworthy despite the positive initial reading of the Purchasing Managers' Index (PMI) for manufacturing in Japan, which recorded approximately 50.8 points in April, compared to the previous reading of the index, which stood at 49.5 points.

On the other hand, US President Joe Biden met with House Speaker Kevin McCarthy on Monday to reach an agreement to avoid a potential default on the country's obligations. McCarthy explained that negotiators from both parties are close to reaching an agreement but added that there is still sufficient time to prevent a catastrophic default in meeting US obligations on June 1. Treasury Secretary Janet Yellen warned that the failure to pay the country's debts poses a threat to the US credit rating and increases the possibility of a recession.

Regarding the latest data, the US manufacturing Purchasing Managers' Index dropped to 48.5 points, in contrast to the previous reading of the index, which stood at 50.2 points. Meanwhile, the US services Purchasing Managers' Index experienced an increase to 55.1 points, surpassing the previous reading of the index, which was at 53.6 points. Market participants are eagerly anticipating the release of the Federal Reserve meeting minutes later today to assess the committee members' views on economic developments and discuss the path of monetary policy in the upcoming period.

Key pivot levels that may affect movements in the USD/JPY pair

The USD/JPY pair has successfully surpassed the resistance level of 138.00, which had been tested multiple times and posed a challenge to the pair's upward movement. However, it managed to break through and reached a new price peak for this year at 138.90. If the pair maintains stability above the 138.00 level, the upward momentum may continue, targeting the 140.00 level. Surpassing this level could contribute to further upward movement towards the 142.00 level.

On the other hand, if the pair retraces from its current levels, it may find substantial support in the range of 138.00 to 137.50. Maintaining this support is crucial to signal continued upward intentions. However, if the pair drops below these levels, the downward movement may extend towards the 135.35 support level, followed by the 134.00 level. A break below 134.00 could potentially trigger a further decline towards the support levels of 132.00 and 130.00.