USD/JPY trims gains after US data, remains capped below 112.00 handle

The USD/JPY pair trimmed some of its early gains to the vicinity of 112.00 handle and has now retreated back to 111.70-65 band following the US economic releases.

Spot ran through some fresh offers after the Fed's preferred inflation gauge, Core PCE Price Index recorded a drop in March. In fact, the index fell 0.1% m-o-m (-0.1% expected), dragging the yearly core rate to 1.6%, and failed to assist the US Dollar to build on to its early gains. 

Adding to the disappointment, personal income reported a lower-than-expected growth of 0.2% (0.3% expected) during March, down from previous month's 0.4% growth, while personal spending remained flat m-o-m during the said month. 

Next in focus would be the ISM Manufacturing PMI print for April, which expected to have eased from previous month's 57.2 to 56.5 in April.

Technical levels to watch

Weakness below 111.30-25 immediate support is likely to drag the pair back below the 111.00 handle towards testing its next support near 110.60-55 horizontal support. 

On the upside, any up-move beyond 112.00 handle now seems to confront resistance near 112.20 level (March 31 high) ahead of 112.65-70 horizontal resistance.