- USD/JPY finds support ahead of 113.
- Wall Street struggles to recover its losses.
- US Dollar Index stays in red below 97 ahead of FOMC minutes.
The USD/JPY fell to 113.20 area in the early NA session following the disappointing PCE inflation data from the U.S. but rebounded modestly as investors moved to the sidelines before the FOMC releases the minutes of its November meeting. As of writing, the pair was trading at 113.45, losing 0.2% on a daily basis.
The US Dollar Index, which came under a bearish pressure following FOMC Chairman Powell’s dovish remarks on the policy outlook, extended its slide after today’s data from the U.S. showed that the core PCE price index, the Fed’s preferred measure of inflation, came in at 1.8% on a yearly basis in October to move further away from the Fed’s target of 2%. However, other details of the report showed that the personal income and personal spending rose more than expected on a monthly basis in October to help the greenback limit its losses. At the moment, the index is down 0.05% on the day at 98.90.
Previewing today’s FOMC release, “Should Chair Powell or the Fed minutes continue to emphasise foreign growth risks or risks of US growth slowing next year, it could suggest broader concerns among the FOMC as a whole, implying a more moderate rate hike path and, as a result, USD weakness,” Morgan Stanley analysts argued.
On the other hand, investors remain hesitant to return to risky assets as the latest headlines on the U.S. – China trade conflict don’t offer any fresh insights hinting at a positive outcome at the G-20 summit this weekend. At the moment, the Dow Jones Industrial Average and the S&P 500 are both down around 0.2% on the day.
Technical levels to consider
The pair could face the first technical support at 113.30 (20-DMA) ahead of 112.90 (50-DMA) and 112.30 (Nov. 20 low). On the upside, resistances are located at 113.60 (daily high), 114 (Nov. 28 high) and 114.55 (Oct. 3 high).
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