• US equities plunged in the previous session after poor manufacturing data.
• The US ISM manufacturing PMI was at 47.2, below forecasts of 47.5.
• Economists expect US employers to add 165,000 workers in August.

The USD/JPY price analysis shows a shift in sentiment for the pair as the yen firms due to safe-haven demand. Poor US data overnight raised fears of a recession, leading to a scramble for safety. At the same time, the dollar strengthened broadly except against the yen.

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US equities plunged in the previous session after poor manufacturing data spooked investors. Appetite for risky assets fell, while that for safe-haven assets like the yen and US dollar soared. Data on Tuesday revealed that business activity in the US manufacturing sector came in below expectations. The ISM manufacturing PMI was at 47.2, below forecasts of 47.5, raising fears of a hard landing by the Fed. Figures below 50 indicate a contraction in the sector.

After the report, US Treasury yields plunged, indicating a rise in Fed rate cut expectations. On the other hand, the yield-sensitive yen rallied. At the same time, the dollar, which is also considered a haven in times of uncertainty, rose against other major peers.

The market turmoil comes ahead of a set of US employment figures, including job openings and jobless claims. However, the major one is the nonfarm payrolls report due on Friday. This will show the state of the labor market and whether the Fed will implement a small or a big rate cut in September.

Economists expect US employers to add 165,000 workers in August. At the same time, they expect the unemployment rate to ease from 4.3% to 4.2%.

USD/JPY key events today

• US JOLTS Job Openings

USD/JPY technical price analysis: 0.618 Fib prompts bearish takeover

On the technical side, the USD/JPY price has fallen below the 30-SMA, indicating a shift in sentiment to bearish. Initially, bulls were in control, pushing the price to the 0.618 Fib level. However, they failed to break above this level, allowing bears to take over.

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The price has broken below the SMA, and the RSI now sits below 50. Nevertheless, bears must detach from the SMA and start making lower highs and lows to confirm a bearish trend. In such a case, the price will likely break below the 144.00 support to retest the 142.03 support level.

https://www.forexcrunch.com/blog/2024/09/04/usd-jpy-price-analysis-yen-strengthens-as-us-data-disappoints/