- Upbeat sentiment helps the pair preserve its strength on Friday.
- Wall Street looks to start the day in the green.
- Coming up: Personal spending/income, and PCE price index from the U.S.
The USD/JPY pair rose to a weekly high of 110.93 earlier in the session and has gone into a consolidation phase ahead of the data. As of writing, the pair is trading at 110.77 adding 0.13% on a daily basis.
The upbeat risk sentiment as reflected by rising Treasury bond yields and the strong performance of global equity indexes continues to weigh on the traditional safe-havens such as the JPY on Friday. While the 10-year T-bond yield is gaining 1.4% on the day, the S&P 500 Futures is rising 0.4%, suggesting that Wall Street is likely to open the day in the positive territory, which could provide a boost to the pair in the second half of the day.
In the meantime, ahead of the PCE price index data from the U.S., the US Dollar Index stays in the upper half of its daily range. “We expect PCE core rose 0.2% m/m (unchanged at 1.9% y/y) which is just below the Fed’s 2% target,” Danske Bank analysts said. If we see the core annual rate rise to 2% or above, we could see the greenback gain further strength in the second half of the day and help the pair test the 111 mark.
Technical levels to watch for
The pair could face the initial resistance at 110.95/111 (20-DMA/psychological level) ahead of 111.45 (200-DMA) and 111.90 (Mar. 15 high). On the downside, supports are located at 110.55 (100-DMA), 110 (psychological level/Mar. 28 low) and 109.70 (Mar. 25 low).
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