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The renewed uptick in USD/JPY declined nearly at 118.20 levels after seeing rebounds in the treasury yields, which sent the rate back in line at 118 handle.

The pair traded at 118.02, retreating a brief dip to 117.87 during the course of session, up by about 0.25% on the day. The USD/JPY found support on full market returns and boosted their renewed confidence in the US economy and Trump’s policy.          

Ahead of the fresh highs in the Japanese stocks, sentiments around the pair were also underpinned. However, the recent leg down could add an optimism for an upside consolidation phase in the US dollar index as the US treasury yields remained slightly lower.     

Meanwhile, all eyes are on the FOMC Dec meeting minutes scheduled to be reported in the NA session, while Thursday’s ADP data and Friday’s payrolls data will also be closely watched to wait for further direction on the dollar.    

Positive ISM Manufacturing Data

U.S. factory output has been consistently on a positive trend for the fourth straight month after a sub-zero print in August a survey by the Institute of Supply Management posted earlier today.

The most recent ISM Manufacturing Index was up by about 54.7 from an earlier reading of 53.2 last month, suggesting a steady stance for the factory sector after a prolonged decline despite a renewed dollar strength that supported the U.S. Presidential Election.

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In essence, a print above 50 in the ISM Index, suggests an expansion in the manufacturing economy, while a below 50 reading specifies contraction. Apparently, analysts are expecting the ISM Index to reach 53.8.  

The component breakdown showed that New Order rose to approximately 60.2 from 53.0, while production climbed to 60.3 from an earlier reading of 56 in November.   

Buck: On Roller Coaster Ride

The buck was seen in a roller coaster ride in Asian and early European trading in today’s session after the dollar first rally in Tokyo session, which still faced another sell-off in Europe. The pair hit as high as 118.18, but has failed to maintain its stance for over two weeks.  

Current Stance of USD/JPY Pair

The chart below illustrates USD/JPY price movement amid Trump’s policy, including another sell-off for the dollar in Europe.

Given a bullish tone of the pair, market participants still indulge in selling currencies as Trump’s policy and US treasury yields weigh in on the USD/JPY.

Further, the pair is currently showing signs of consolidating phase, and traded in a light trading volume near resistance 118.652.

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Conclusion

As the illustrative chart above shows a bullish tone on the pair, market participants are recommended to still wait on the sidelines as there aren’t any supporting candle present as of writing.

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