Overview: USD/JPY is consolidating with the bearish bias after hitting a six-week low of 97.50 Tuesday. The pair is undermined by flows to safe-haven JPY and unwinding of JPY-funded carry trades amid increased risk aversion (VIX fear gauge rose 7.43%, to 12.72, S&P fell 0.57% overnight) on prospects of stimulus withdrawal by the Federal Reserve after Fed’s Evans said he expects the U.S. central bank could start curtailing its $85 billion-a-month bond-buying program before the year ends and wouldn’t rule out tapering at its September policy meeting, echoing Fed’s Fisher’s comments Monday; while Fed’s Lockhart said the Fed could start cutting back its quantitative easing program at any of the three remaining Federal Open Market Committee meetings this year. USD/JPY is also weighed by a drop in U.S. IBD/TIPP Economic Optimism Index to 45.1 in August from 47.1 in July; Japan exporter sales. But the U.S. dollar sentiment soothed by narrower-than-expected U.S. June trade deficit of $34.22 billion (versus $43.5 billion forecast), its lowest level since 2009. USD/JPY losses are also tempered by demand from Japan importers; Bank of Japan’s aggressive monetary easing measures aimed at helping to reach its 2% inflation target; higher U.S. Treasury yields. Daily chart is negative-biased as MACD & stochastics are bearish.
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. Short positions are recommended with the first target at 96.75; a breach of this target will move the pair downward further and you should expect the second target at 96.2. The pivot point stands at 97.8. In case the price moves in the opposite direction and returns from its support, and moves above its pivot point, then trading in a higher range is the most favorable and buying above its pivot with the first target at 98.15 and the second target at 98.6 is recommended.
Support levels: S1 – 96.75 S2 – 96.2 S3 – 95.75
Resistance levels: R1 – 98.15 R2 – 98.6 R3 – 99
The material has been provided by InstaForex Company – www.instaforex.com
Overview:
USD/JPY is consolidating with the bearish bias after hitting a six-week low of 97.50 Tuesday. The pair is undermined by flows to safe-haven JPY and unwinding of JPY-funded carry trades amid increased risk aversion (VIX fear gauge rose 7.43%, to 12.72, S&P fell 0.57% overnight) on prospects of stimulus withdrawal by the Federal Reserve after Fed’s Evans said he expects the U.S. central bank could start curtailing its $85 billion-a-month bond-buying program before the year ends and wouldn’t rule out tapering at its September policy meeting, echoing Fed’s Fisher’s comments Monday; while Fed’s Lockhart said the Fed could start cutting back its quantitative easing program at any of the three remaining Federal Open Market Committee meetings this year. USD/JPY is also weighed by a drop in U.S. IBD/TIPP Economic Optimism Index to 45.1 in August from 47.1 in July; Japan exporter sales. But the U.S. dollar sentiment soothed by narrower-than-expected U.S. June trade deficit of $34.22 billion (versus $43.5 billion forecast), its lowest level since 2009. USD/JPY losses are also tempered by demand from Japan importers; Bank of Japan’s aggressive monetary easing measures aimed at helping to reach its 2% inflation target; higher U.S. Treasury yields. Daily chart is negative-biased as MACD & stochastics are bearish.
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. Short positions are recommended with the first target at 96.75; a breach of this target will move the pair downward further and you should expect the second target at 96.2. The pivot point stands at 97.8. In case the price moves in the opposite direction and returns from its support, and moves above its pivot point, then trading in a higher range is the most favorable and buying above its pivot with the first target at 98.15 and the second target at 98.6 is recommended.
Support levels:
S1 – 96.75
S2 – 96.2
S3 – 95.75
Resistance levels:
R1 – 98.15
R2 – 98.6
R3 – 99
The material has been provided by InstaForex Company – www.instaforex.com
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