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   “¢   Powell’s dovish sounding comments held the USD bulls on the defensive.
   “¢   Disappointing US macro data further add to the prevalent USD selling bias.
   “¢   Traders seemed reluctant to place aggressive bets ahead of FOMC minutes.

The USD/JPY pair maintained its offered tone through the early North-American session and refreshed session low post-US data, albeit quickly recovered few pips thereafter.

The latest leg of a sudden drop in the last hour followed the disappointing releases of US core PCE price index and initial weekly jobless claims, though was partly offset by better than expected personal income/spending data.

“Personal income and expenditures in October were better than analysts forecasts. Holiday spending should at least equal its historical average with good possibility for a strong selling season,” comments Joseph Trevisani, a senior market analyst at FXStreet after the data.

He further writes: “Annual core PCE prices have unexpectedly dropped 0.2% in two months from 2% in August to 1.8% in October. Is this a trend? Unlikely. Will it get the Fed’s attention? Likely.”

Mixed US economic data, against the backdrop of the Fed Chair Jerome Powell’s dovish comments, did prompt some US Dollar weakness, albeit a modest rebound in the US Treasury bond yields helped limit deeper losses.

Adding to this, the prevalent positive mood around equity markets did little to boost the Japanese Yen’s safe-haven demand and further held traders back from placing any aggressive bets ahead of the next key event risk – release of the latest FOMC meeting minutes.  

Technical outlook

Valeria Bednarik, FXStreet’s own American Chief Analyst explains:  “The 4 hours chart shows that the pair broke below its 100 SMA and is now struggling with it, still unable to surpass it, while technical indicators are recovering alongside price within negative ground, falling short of suggesting strong buying interest. The upside potential will be a bit firmer on a recovery above 113.60, while a bearish break will expose the 112.50/60 price zone.”