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The USD/JPY dropped further during the American session and bottomed at 109.22, the lowest intraday level since July 19. The pair remains near the bottom, under pressure amid a stronger Japanese yen across the board. The yen is among the top performers, boosted by a rally in US bonds. The US 10-year yield is down almost 4% and recently reached at 1.179%, the lowest since July 20. At the same time, equity prices in the US are up by 0.45% on average.

Economic data from the US came in below expectations. The ISM manufacturing index dropped from 60.6 to 59.5, below the 60.9 of market consensus. The employment index rose to 52.9, ahead of Friday’s Nonfarm Payroll report. From a technical perspective, a consolidation below 109.30 should keep the bearish momentum in place in USD/JPY, with doors open to a decline to test the July low (109.06); below, the next support stands at 108.55. On the upside, now 109.40 is the immediate resistance, followed by 109.65 and 109.75 (Aug 2 high).