USD/JPY’s rally from 146.00 loses steam above the 147.50 area

• The US dollar stalls around 147.50 after rallying from session lows near 146.00.
• The pair appreciates 0.8% on the day following a two-day reversal.
• US macroeconomic data has left the USD looking for direction.
   

The sharp greenback rally witnessed during Friday’s Asian and early European trading sessions, has lost steam after hitting 147.85. The pair, however, is consolidating gains above the 100-hour SMA, after a 0.8% daily appreciation.

The dollar treads water after the release of US data

The greenback has lost bullish momentum in the early US trading session, following the release of a set of first-tier US macroeconomic indicators. US consumer spending increased at a 0.6% pace in September, according to data released by the Department of Commerce, which shows that the US economy remains in good health and paves the Fed’s path for another jumbo hike in December.

On the other hand, wage growth slowed down to a 1.2% pace in the third quarter from 1.3% in the previous one, suggesting the possibility that inflation pressures might have peaked.

Furthermore, the Core Personal Consumption Expenditures, the Fed’s preferred gauge to measure inflationary trends, accelerated to a 5.1% annual rate in September, (from 4.9% in August) but below market expectations of a 5.2% reading. The overall PCE remained flat at a 6.2% yearly pace.

A dovish BoJ sends the yen tumbling

Before that, the Japanese yen had pared some of the previous days’ gains, hammered by the dovish rhetoric of the Bank of Japan’s monetary policy decision. The BoJ has confirmed its accommodative policy, as widely expected, leaving its target for short-term rates at -0.1% and reaffirming their commitment to keeping the 10-year bond yield near 0%.

Beyond that, BoJ President Kuroda stated that the bank is not planning “to raise interest rates or head for an exit (from the current policy) any time soon,", which has triggered a broad-based yen reversal.

Technical levels to watch