The ISM Manufacturing data that came out on Tuesday 10:00AM EDT was better than expected and pushed the USD/JPY higher. The April ISM Services PMI came in 53.5 disappointing expectation of 55.5, and coming in lower than March's 56.0 reading. The USD/JPY was rallying before this release, and the initial reaction is resistance against the rally.

USD/JPY 1H Chart 5/3/2012 10:25AM EDT

USD/JPY

The USD/JPY is seen in the 1H chart with bullish momentum as the RSI pushed above 70 and has stayed above 40. At the moment the 81.00 handle and declining channel resistance is the limit of the bullish outlook ahead of Friday's Non-Farm Payroll. If the market can push above 80.60 (also 200-hour simple moving average), the 81.00 level is in sight. However, if the market pushes below 80.00 in the US session, we can open up the lows near 79.65 down to the 79.50 handle, ahead of the NFP.

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Fan Yang CMT is the Chief Technical Strategist, trader, educator and a of the main contributors to FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.