Title: USD/JPY Holds Steady Near Multi-Month Highs as Dollar Momentum Fades Following ISM Services Data
Original Author: Vicky McKeever, FXStreet
URL: https://www.fxstreet.com/news/usd-jpy-trades-flat-near-multi-month-highs-greenback-loses-steam-post-ism-202511031816
The US dollar is showing signs of consolidation after a recent rally, particularly against the Japanese yen. As of early November 2025, the USD/JPY exchange rate has steadied near multi-month highs amid mixed economic signals from the United States and cautious sentiment from global markets. The greenback initially strengthened due to market optimism surrounding US economic resilience and expectations for the Federal Reserve to maintain its policy stance. However, the pace of gains appears to be slowing as investors digest the latest data on the nation’s service sector, released by the Institute for Supply Management (ISM), along with broader macroeconomic developments.
In-depth market analysis reveals that while the underlying fundamentals continue to support a strong US dollar, many traders are becoming more cautious. Below, we examine how USD/JPY has evolved in recent sessions and what the key drivers influencing this major currency pair are currently.
1. USD/JPY Trades Flat Near 150.40
– On the session under review, USD/JPY lingered around the 150.40 area, level with its previous session and close to its multi-month highs.
– The pair had previously rallied strongly on the back of strong US Treasury yields and safe-haven flows into the dollar.
– Traders are now waiting for new catalysts before pushing the pair decisively higher or triggering a correction.
– The 150.00 level remains a psychological and technical threshold for both short-term traders and long-term investors.
2. Greenback’s Momentum Ebbs After Weaker-than-Expected ISM Services Data
The release of the ISM non-manufacturing report for October triggered some softness in the greenback:
– ISM Services PMI for October came in at 51.8, below the forecasted 53.0 and down from September’s 53.6.
– The report signaled weaker business activity in services, which make up the bulk of the US economy.
– New orders and employment within the report also showed slower growth.
– Market participants interpreted the data as a potential indication that economic resilience in the service sector may be cooling.
– This, in turn, reduced immediate expectations of further tightening by the Federal Reserve in the near term.
3. Market Sentiment Mixed on US Economic Outlook
While the US economy remains robust in several areas, including consumer spending, uncertainties linger, particularly regarding inflation trends and future Federal Reserve actions. Investors are currently weighing key macroeconomic indicators:
– The labor market remains tight, which supports wage growth and consumer spending.
– Inflation data in previous months showed signs of cooling, particularly core PCE readings.
– The Federal Reserve, in its last meeting, left interest rates unchanged but maintained its data-dependent approach.
– Investors are cautious about placing further aggressive long bets on the dollar until more clarity emerges on FOMC policy direction.
– Market consensus is slowly growing that the Fed may have reached the terminal rate for this cycle, which is tempering dollar enthusiasm.
4. Japanese Yen Remains Weak But Lacks Direction
Despite moments of strength, the yen continues to exhibit weakness overall:
– The Bank of Japan has only made minor policy adjustments in its yield curve control (YCC) framework.
– Policymakers in Tokyo remain committed to accommodative monetary conditions, which are in sharp contrast to Western central banks.
– The cost of carry remains high for selling yen, and that creates structural headwinds for the currency.
– However, jawboning from Bank of Japan officials and Finance Ministry warnings about excessive yen depreciation are keeping traders alert for possible intervention.
– So far, Japanese authorities have not taken action to directly support the currency in the FX market, but verbal interventions
Explore this further here: USD/JPY trading.