Later in the session, the S&P Global Services PMI will impact US dollar demand and USD/JPY movements. Economists forecast the Services PMI to drop from 53.7 in May to 52.9 in June.
A lower PMI reading could raise bets on a Q3 Fed rate cut, potentially dragging USD/JPY toward the 50-day EMA. A break below the 50-day EMA may pave the way to 144.5. Conversely, a higher print could temper 2025 Fed rate cut bets, sending the pair toward the 149.358 resistance level.
However, beyond the headline PMI, price trends will need consideration since the services sector accounts for around 80% of the US GDP.
While Monday’s PMI data are crucial for the BoJ and the Fed, trade developments and the Iran-Israel conflict may continue driving market volatility. US-Japan trade frictions could impact the Japanese economy and hopes for a BoJ rate hike. However, an escalation in the Middle East conflict may boost demand for safe-haven assets, including the Yen.
