Technical analysis of USD/JPY for January 16, 2014
January 16, 2014 4:30 pm
Overview: USD/JPY is expected to trade in lower range. It is underpinned by negative dollar sentiment (ICE spot dollar index last 81.01 versus 80.67 early Wednesday), yen-funded carry trades amid positive risk sentiment (S&P hit record high 1850.84, closed higher 0.52% at 1848.38 overnight) on signs of the U.S. economic growth. The New York Fed’s Empire State business conditions index surged to 12.51 in January (the highest since May 2012 and well above forecast of 3.0) from a revised 2.22 in December (originally reported as 0.98). The U.S. December PPI rose 0.4% on month (in line with forecast), while the core PPI rose more-than-expected 0.3% (versus +0.1% forecast), comments in Federal Reserve beige book that the U.S. economy is continuing to grow at a moderate pace and that the economic outlook is positive. Fed’s Evans said although the December U.S. jobs report was disappointing, “the recent data on economic activity generally have been encouraging” and “importantly, the labor market has improved” and will likely get better this year. Being bolstered by expectations, the Federal Reserve will cut its monthly bond purchases to $65 billion at the next meeting on Jan. 28-29. USD/JPY is also supported by higher U.S. Treasury yields, greater demand from Japan importers and investment trusts and ultra-loose Bank of Japan’s monetary policy. But USD/JPY gains are tempered by Japan’s export sales.
Technical comment: Daily chart is mixed as MACD is bearish, but stochastics is in bullish mode.
Trading recommendation:
The pair is trading below its pivot point. It is likely to trade in a lower range as far as it remains below its pivot point. A short position is recommended with the first target at 104.05 in mind. A breach of this target will move the pair further downwards to 103.8. The pivot point stands at 104.45. In case the price moves in the opposite direction, it bounces back from support, and moves above its pivot point, the price is most favourably expected to move further to the upside. In that scenario, a long position is recommended with the first target at 104.7 and the second target at 105.05.
Resistance levels: 104.7 105.05 105.45
Support levels: 104.05 103.8 103.5
The material has been provided by InstaForex Company – www.instaforex.com
Overview:
USD/JPY is expected to trade in lower range. It is underpinned by negative dollar sentiment (ICE spot dollar index last 81.01 versus 80.67 early Wednesday), yen-funded carry trades amid positive risk sentiment (S&P hit record high 1850.84, closed higher 0.52% at 1848.38 overnight) on signs of the U.S. economic growth. The New York Fed’s Empire State business conditions index surged to 12.51 in January (the highest since May 2012 and well above forecast of 3.0) from a revised 2.22 in December (originally reported as 0.98). The U.S. December PPI rose 0.4% on month (in line with forecast), while the core PPI rose more-than-expected 0.3% (versus +0.1% forecast), comments in Federal Reserve beige book that the U.S. economy is continuing to grow at a moderate pace and that the economic outlook is positive. Fed’s Evans said although the December U.S. jobs report was disappointing, “the recent data on economic activity generally have been encouraging” and “importantly, the labor market has improved” and will likely get better this year. Being bolstered by expectations, the Federal Reserve will cut its monthly bond purchases to $65 billion at the next meeting on Jan. 28-29. USD/JPY is also supported by higher U.S. Treasury yields, greater demand from Japan importers and investment trusts and ultra-loose Bank of Japan’s monetary policy. But USD/JPY gains are tempered by Japan’s export sales.
Technical comment:
Daily chart is mixed as MACD is bearish, but stochastics is in bullish mode.
Trading recommendation:
The pair is trading below its pivot point. It is likely to trade in a lower range as far as it remains below its pivot point. A short position is recommended with the first target at 104.05 in mind. A breach of this target will move the pair further downwards to 103.8. The pivot point stands at 104.45. In case the price moves in the opposite direction, it bounces back from support, and moves above its pivot point, the price is most favourably expected to move further to the upside. In that scenario, a long position is recommended with the first target at 104.7 and the second target at 105.05.
Resistance levels:
104.7
105.05
105.45
Support levels:
104.05
103.8
103.5
The material has been provided by InstaForex Company – www.instaforex.com
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