USD/JPY edges lower toward 111 handle post-US GDP figures

• First estimate of Q2 annual real GDP growth comes in at 4.1% to match expectations.
• Personal consumption expenditures rise 1.8% vs. 2% expected.
• US Dollar Index erases part of daily gains after mixed data.

The USD/JPY pair lost around 20 pips in a matter of minutes after the most anticipated data of the day from the United States gave mixed signals. As of writing, the pair was trading at 111.05, losing 0.15% on the day.

According to the Bureau of Economic Analysis, the first estimate of the annual real GDP growth in the second quarter of 2018 is 4.1%, a strong improvement when compared to the first quarter’s 2.2% (revised up from 2%) reading. The details of the report revealed that  personal consumption expenditures (PCE) contributed positively to the GDP growth while, excluding food and energy prices, the PCE price index increased 2.0% to fall short of the experts’ estimate of 2.2%.

Although the GDP growth data came in line with the general consensus, market’s have been pricing a higher-than-expected reading since the start of the week amid speculations of US President Donald Trump leaking information regarding a number close to 5%. After rising to 94.90 mark ahead of the data, the US Dollar Index lost its traction and was last seen flat on the day at 94.78.

Later in the session, the University of Michigan is going to publish the final Consumer Sentiment Index in July, which is expected to stay unchanged at 97.1. Investors will be looking for clues about the impact of trade concerns on consumer confidence.

Technical outlook

The initial support for the pair aligns at 110.70 ahead of 110 (psychological level) and 109.65 (100-DMA). On the upside, resistances could be seen at 111.55 (20-DMA), 112.20 (Jul. 11 high) and 113 (psychological level/Jul. 17 high).