USD/JPY drops below 111.00, US 10-yr-2-yr spread unchanged as Core PCE missed estimates

Omkar Godbole FXStreet Contributor

The Dollar-Yen pair fell to a session low of 110.84 as the core personal consumption expenditure (Core PCE) declined to 0.7% q/q in Q2 vs. estimate of 0.9%.

The official data released in the US showed the economy expanded at annualised rate of 2.6% vs. expected print of 2.7%. The employment cost index came-in at 0.5% vs. 0.6% expected.

The soft inflation number is weighing over the US dollar, although the yield curve/spread between the 10-year yield and the 2-year yield remains largely unchanged around 95 basis points. This could be due to the upward revision of the previous quarter’s personal consumption (revised to 1.9% from 1.1%).

USD/JPY Technical Levels

A break above 111.20 (4/1 Gann fan line) would expose resistance at 111.56 (100-DMA) - 111.64 (50-DMA) and 112.03 (4-hour 200-MA). On the other hand, breach of support at 110.62 (Monday’s low) would open up downside towards 110.235 (May 2017 low) and 110.00 (psychological level).

An end of the day close below 110.62 (Monday’s Doji candle low) would signal the sell-off from the recent high of 114.36 has resumed.

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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