• USD/JPY came under bearish pressure in the early American session.
  • Core PCE inflation in US rose to 3.4% (YoY) in May as expected.
  • US Dollar Index stays in the negative territory below 91.70.

After spending the first half of the day in a relatively tight range below 111.00, the USD/JPY pair lost its traction in the early American session and dropped to a fresh daily low of 110.50. As of writing, the pair was down 0.25% on the day at 110.58.

Inflation fears ease after PCE Price Index data

The data published by the US Bureau of Economic Analysis revealed on Friday that the Core Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred gauge of inflation, rose to 3.4% on a yearly basis in May from 3.1%. Although this reading came in line with the market consensus, the USD lost interest. Reflecting the renewed USD weakness, the US Dollar Index is down 0.16% on the day at 91.67. 

Meanwhile, other data from the US showed that Personal Income contracted by 2% in May and Personal Spending remained unchanged on a monthly basis.

Later in the session, the University of Michigan will release its final estimate of June’s Consumer Sentiment Index. 

Meanwhile, Wall Street’s main indexes remain on track to open modestly higher after the inflation report, suggesting that the greenback could have a tough time gathering strength in the second half of the day.

Technical levels to watch for

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