Manufacturing PMI Data to Influence Trade Sentiment
On Monday, June 2, Japan’s Jibun Bank Manufacturing PMI requires consideration as President Trump’s 90-day pause on Liberation Day tariffs nears its end. Economists forecast the Manufacturing PMI to rise slightly from 48.7 in April to 49 in May.
A higher PMI reading may ease concerns about the impact of tariffs on Japan’s manufacturing sector. However, investors should assess key subcomponents, including employment, new orders, and price. Upward trends in these key sub-components could support a more hawkish BoJ stance, boosting Yen demand.
Conversely, weaker readings may reinforce BoJ caution, potentially pressuring the Yen.
Services PMI: Crucial for BoJ Rate Hike Bets
On Wednesday, June 4, the all-important Jibun Bank Services PMI will have a greater impact on the BoJ policy stance. Economists expect the Services PMI to slide from 52.4 in April to 50.8 in May.
Given that the services sector accounts for over 70% of Japan’s GDP, a drop below the neutral 50 level may retrigger recession fears and push USD/JPY higher. Conversely, a higher-than-expected print may bolster expectations for a Q3 2025 BoJ policy move. A more hawkish BoJ stance would send USD/JPY lower.
BoJ attention will also be on labor and price trends—soft numbers could delay a hike to Q4, while rising wages and prices may accelerate policy tightening.
Daily Chart
On the daily chart, the USD/JPY trades below the 50-day and 200-day EMAs, maintaining a bearish technical outlook.
A move above the 50-day EMA could target resistance at the May 29 high of 146.285. Sustained momentum could push toward the May 12 high of 148.647.
On the downside, a break below the May 27 low of 142.108 exposes the 140.309 support level and the September 2024 low of 139.576.
The 14-day Relative Strength Index (RSI) sits at 47.59, indicating potential for further downside before entering oversold territory (RSI< 30).
