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  • Wall Street’s performance on Friday points to a risk-on mood.
  • US Dollar Index remains on track to finish the week above 95.
  • Annual core PCE price index in the U.S. remains steady at 2%.

After edging down to 113.30 area during the European trading hours, the USD/JPY pair gained traction in the second half of the day and rose above 113.50 as the major equity indexes in the U.S. started to erase the early losses they suffered. As of writing, the pair was trading at 113.55, adding 0.15% on the day. The sharp upsurge witnessed yesterday and today’s modest gains keep the pair on track to record its highest weekly close of the year.

Today’s data from the United States showed that the core-PCE price index, the Fed’s preferred measure of inflation, rose 2% on a yearly basis in August to match the previous reading and the market consensus. Further details of the report revealed that personal income and personal spending both increased by 0.3% on a monthly basis in August.

With these readings confirming the Fed’s hawkish stance, the US Dollar Index advanced to its highest level in more than two weeks. However, the index struggled to push higher as it looks like investors are booking their profits into the London-fix. At the moment, the index is still up 0.1% on the day at 95.10.

Although the greenback seems to be struggling to preserve its momentum, the USD/JPY pair clings to gains as the safe-haven JPY fails to find demand with Wall Street turning positive on the day to reflect an improved market sentiment.

Technical levels to consider

The initial resistance for the pair aligns at 113.75 (Dec. 12, 2017, high) ahead of 114.45 (Oct. 27, 2017, low) and 115 (psychological level). On the downside, supports align at 113.30 (daily low), 112.55 (Sep. 27 low) and 112 (psychological level/20-DMA).