The initial value of Japan's manufacturing purchasing managers' index for May was 50.5, and the previous value was 49.6. Economists previously predicted that Jibun Bank's manufacturing PMI would rise from 49.6 to 49.7 in May. Furthermore, economists expect Jibun Bank's service sector PMI to fall from 54.3 to 53.8.

Jibun Bank's service sector PMI may affect buyer demand in yen. Following the spring salary increase, the Bank of Japan hopes that the service sector will drive demand-driven inflation and create a higher interest rate environment. Furthermore, the service sector contributes more than 60% to the Japanese economy.

However, investors must consider sub-components, including input prices, employment, and new orders.

In addition to the numbers, investors should also pay attention to the Bank of Japan's comments. Perceptions about inflation, the economic outlook, and the timing of interest rate hikes could change the situation. The weak yen continues to put pressure on the Bank of Japan in anticipation of a summer rate hike.

Later on Thursday, the US initial jobless claims data and the preliminary private sector purchasing managers' index were worth investors' attention.

Economists predict that in the week ending May 18, the number of first-time jobless claims will drop from 222,000 to 220,000. Tighter labor market conditions are likely to support wage growth and increase disposable income. The upward trend in disposable income is likely to spur consumer spending and demand-driven inflation. Furthermore, tightening labor market conditions may make it possible for the Federal Reserve to raise interest rates.

However, the S&P Global Services Purchasing Managers' Index is likely to have a greater impact on the Federal Reserve's interest rate path. The service sector contributes more than 70% to the US economy, with housing service inflation being the focus.

Economists predict that the S&P Global Services PMI will remain unchanged at 51.3. The better-than-expected data is likely to fuel speculation about the Federal Reserve's interest rate hike. However, investors should consider sub-components, including price and employment.

After the FOMC minutes were tougher than expected, investors should also pay attention to FOMC members' reactions to the statistics.

The FOMC minutes show that Federal Reserve officials are increasingly concerned about inflation at recent meetings, and members say they lack confidence to push forward with interest rate cuts.

Some participants said they are prepared to further tighten policies if future risks arise and such measures are needed. Furthermore, participants indicated that it would take longer than expected to have more confidence that the inflation rate will continue to move towards 2% in a sustainable manner.

In the short-term outlook, the short-term trend of USD/JPY will depend on service sector PMI data and views on monetary policy. The better-than-expected US PMI data may increase investors' bets on the Fed's interest rate hike and bias monetary policy differences in favor of the US dollar.

USD/JPY technical analysis

FXEmpire analyst Bob Mason said that USD/JPY easily stayed above the 50-day and 200-day EMAs, confirming bullish price signals.

USD/JPY breaking through the 157 mark will support its move towards the 158 mark. If it returns to the 158 mark, the bulls may rush towards the April 29 high of 160.209.

Also, a fall below the 155 mark of USD/JPY may cause bears to strike near the 50-day EMA. A break below the 50-day SMA may indicate a fall towards the 151.685 support level.

The 14-day RSI is 59.57, indicating that USD/JPY will recover to a high of 160.209 on April 29 and then enter the overbought region.

At 10:05 Beijing time, USD/JPY is now reported at 156.76/77.