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  • 10-year US T-bond yield gains nearly 1% on Monday.
  • S&P 500 and Nasdaq Composite renew to intraday record highs.
  • US Dollar Index struggles to push higher above 98.

The USD/JPY pair started  the week in a calm manner and spent the Asian session moving sideways near 111.60 before gaining traction in the second half of the day. However, after touching a session high of 111.90, the pair struggled to preserve its momentum and was last seen trading at 111.81, adding 0.2% on the day.

The 10-year US Treasury bond yield, which usually shows a strong positive correlation with the USD/JPY pair, rose nearly 1% on the day to fuels the pair’s daily advance. Furthermore, major equity indexes in the United States started the day modestly higher with the S&P 500 and the Nasdaq Composite indexes both renewing their intraday record highs and provided an additional boost to the risk-sensitive pair.

Nevertheless, Wall Street seems to be having a difficult time pushing higher, suggesting that the market sentiment is turning neutral on the day.

On the other hand, following today’s mixed Personal Income and Outlays report published by the U.S. Bureau of Economic Analysis, the US Dollar Index failed to make a decisive move in either direction, leaving the pair at the mercy of the market’s risk perception.

The core Personal Consumption Expenditure Price Index, the Fed’s favourite measure of inflation, edged down to 1.6% on a yearly basis in March to miss the market expectation of 1.7% and personal income rose by only 0.1%. On a positive note, personal spending increased by 0.9% in the same period to post its strongest monthly gain in nearly 10 years.

Technical levels to consider

The pair could face the initial resistance at 112 (psychological level) ahead of 112.40 (Apr. 24 high) and 112.85 (Dec. 18, 2018, high). On the downside, supports are located at 111.55 (200-DMA), 110.90 (Apr. 11 low) and 110.55 (100-DMA).