“¢ Core PCE price index betters expectations but does little to ease USD selling pressure.
“¢ Risk-on mood weighs on JPY’s safe-haven demand and remains supportive.
The USD/JPY pair held on to its strong gains near two-week tops, albeit continued with its struggle to make it through the 110.75-80 region.
The latest news report that the US President Donald Trump wants to withdraw the US from the WTO benefitted the Japanese Yen’s safe-haven demand and exerting some downward pressure in the past hour.
However, a clarification by US Treasury secretary Steven Mnuchin, saying that the report was not right, helped limit further damage, albeit a heavily offered tone surrounding the US Dollar collaborated towards keeping a lid on any strong follow-through up-move.
The USD selling pressure remained unabated despite slightly better-than-expected US economic data, showing that the core PCE price index accelerated to 2.0% y/y in May, and did little to provide any fresh bullish impetus to the major.
Today’s US economic docket also features the release of Chicago PMI and Revised UoM Consumer Sentiment but again seems unlikely to provide any meaningful impetus. Nevertheless, the pair still remains on track to end the week on a positive note with a gain of over 0.5%.
Technical level to watch
A convincing move beyond the 110.75-80 region has the potential to lift the pair beyond the 111.00 handle towards testing May swing highs resistance near the 111.40 area. On the flip side, weakness back below mid-110.00s, leading to a subsequent break through the 110.30 support area might prompt some long-unwinding trade and drag the pair back below the key 110.00 psychological mark.
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