Dollar firms as yen slide leads FX moves

The US dollar started the North American trading week on firmer footing Monday, led by a 0.59% gain in USDJPY as the pair traded near 162.30. EURUSD was down 0.18%, while GBPUSD slipped 0.07%, leaving the dollar broadly stronger before US services data and central bank speakers.

USDJPY had tested a swing level near 160.446 on Friday before rebounding. The pair moved back above the 100 and 200 hour moving averages between 161.86 and 161.92, an area traders are using to judge whether last week’s upside pressure can hold.

Yen break tests 2024 highs

The yen move matters because USDJPY recently traded above the 161.95-97 area, described in the data as the old high from 2024 and a level that took the pair to its highest point since 1986. A sustained move above that zone would keep pressure on yen-sensitive positioning and could sharpen attention on Japanese currency risk.

The euro and sterling moves were more contained. EURUSD traded just below its 100 hour moving average at 1.1416, with the 200 hour moving average at 1.1398 as the next target. GBPUSD fell back toward 1.33244 after buyers failed last week to hold above the 1.33658 to 1.33739 swing area.

US data are the next test. The ISM Services PMI is expected at 54.0 for June, down from 54.5 previously but still above the 50 line that separates expansion from contraction. S&P Global said the services sector continued to grow at a subdued pace, citing customer pushback over high prices and low consumer confidence.

At 10:00 a.m. ET on July 6, the ISM Services PMI, business activity, employment, new orders and prices paid readings are due. If services prices stay elevated, the dollar could retain support through rate expectations; if demand cools more than expected, yields may ease further and trim the dollar’s early advantage.