Overview: USD/JPY is consolidating. Liquidity thin in Asia is observed today as financial markets in Japan are shut for holiday. USD/JPY is underpinned by positive USD sentiment (ICE spot dollar index last 82.92 versus 82.77 early Friday) after smaller-than-expected drop in University of Michigan preliminary July consumer sentiment index to 83.9 (versus 83.6 forecast) from final June reading of 84.1; bigger-than-expected 0.8% rise in U.S. June overall PPI (versus +0.5% forecast); Fed’s Plosser saying U.S. central bank should start tapering bond purchases in September and should halt the buying by the end of this year; yen-funded carry trades amid positive investor risk sentiment (VIX fear gauge eased 1.21% to 13.84; S&P rose 0.31% Friday) on better-than-expected U.S. corporate earnings from J.P. Morgan Chase and Wells Fargo and as dovish comments from Federal Reserve Chairman Bernanke Wednesday continue to reverberate–although global risk sentiment can turn negative if China’s 2Q GDP data disappoint. USD/JPY also supported by higher U.S. Treasury yields; Bank of Japan’s aggressive monetary easing measures to help reach its 2% inflation target; sell-yen orders from Japan importers. But USD/JPY gains tempered by buy-yen orders from Japan exporters. Daily chart still negative-biased as stochastics falling from overbought, positive MACD histogram bars contracting; although inside-day-range pattern completed Friday.
Trading recommendation:
The pair is trading below its pivot point. It is likely to trade in lower range as far as it remains below its pivot point. The short position is recommended with the first target at 98.55 in view; the breach of this target will move the pair downward further and you should expect the second target at 98.2. The pivot point stands at 99.65. In case the price moves in the opposite direction it returns from its support and moves above its pivot point, then trading in higher range is the most favorable and buy position is recommended above its pivot with the first target at 100 and the second target at 100.45.
Overview:
USD/JPY is consolidating. Liquidity thin in Asia is observed today as financial markets in Japan are shut for holiday. USD/JPY is underpinned by positive USD sentiment (ICE spot dollar index last 82.92 versus 82.77 early Friday) after smaller-than-expected drop in University of Michigan preliminary July consumer sentiment index to 83.9 (versus 83.6 forecast) from final June reading of 84.1; bigger-than-expected 0.8% rise in U.S. June overall PPI (versus +0.5% forecast); Fed’s Plosser saying U.S. central bank should start tapering bond purchases in September and should halt the buying by the end of this year; yen-funded carry trades amid positive investor risk sentiment (VIX fear gauge eased 1.21% to 13.84; S&P rose 0.31% Friday) on better-than-expected U.S. corporate earnings from J.P. Morgan Chase and Wells Fargo and as dovish comments from Federal Reserve Chairman Bernanke Wednesday continue to reverberate–although global risk sentiment can turn negative if China’s 2Q GDP data disappoint. USD/JPY also supported by higher U.S. Treasury yields; Bank of Japan’s aggressive monetary easing measures to help reach its 2% inflation target; sell-yen orders from Japan importers. But USD/JPY gains tempered by buy-yen orders from Japan exporters. Daily chart still negative-biased as stochastics falling from overbought, positive MACD histogram bars contracting; although inside-day-range pattern completed Friday.
Trading recommendation:
The pair is trading below its pivot point. It is likely to trade in lower range as far as it remains below its pivot point. The short position is recommended with the first target at 98.55 in view; the breach of this target will move the pair downward further and you should expect the second target at 98.2. The pivot point stands at 99.65. In case the price moves in the opposite direction it returns from its support and moves above its pivot point, then trading in higher range is the most favorable and buy position is recommended above its pivot with the first target at 100 and the second target at 100.45.
Support levels:
S1 – 98.55
S2 – 98.2
S3 – 97.65
Resistance levels:
R1 – 100
R2 – 100.45
R3 – 100.75
The material has been provided by InstaForex Company – www.instaforex.com