USD/JPY: Under pressure

Overview:
USD/JPY is trading in lower range. The rate is undermined by negative dollar sentiment after downward revision in U.S. 1Q GDP growth to annualized 2.4% from 2.5%, surprise 10,000 rise in latest U.S. weekly jobless claims to 354,000 (vs 340,000 forecast), smaller-than-expected 0.3% rise in U.S. April pending home sales index (vs +1.7% forecast); Friday’s Nikkei report that the Financial Services Agency and the Financial Futures Association of Japan will impose new rules on foreign exchange margin trading meant to protect investors but also limit their scope for speculation; data showing Japanese investors were net sellers of Y1.117 trillion of foreign bonds and Y104.9 billion of foreign stocks in the week ended May 25–as opposed to forecast that Japanese investors would flood foreign markets in search of higher yields in wake of Bank of Japan’s new quantitative easing measures; Japan exporter sales. But USD/JPY losses tempered by demand from Japan importers; BOJ’s aggressive easing measures to help reach its 2% inflation target; yen-funded carry trades amid improved investor risk sentiment (VIX fear gauge eased 2.02% to 14.53; S&P up 0.37% overnight) as weak U.S. economic data on Thursday assuaged concerns that the Federal Reserve might soon start scaling back its bond-buying stimulus program; Reuters report Japan’s Government Pension Investment Fund might increase its purchase of equities; positions adjustment before weekend. Daily chart is negative-biased as MACD and stochastics are in bearish mode; five-day moving average is below 15-day MA and declining.

Trading recommendations: 
The pair is trading below its pivot point. The pair is likely to trade in lower range as far as it remains below its pivot point. Short position is recommended with the first target at 100.1 in view, breach of this target will move further the pair downward and you should expect the second target at 99.7. Pivot point stands at 100.55. In case the price moves in opposite direction and 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 101.3 and the second target at 101.8.  

Resistance levels:
R1 -101.3
R2 – 101.8
R3 – 102.15

Support levels:
S1 – 100.1
S2 – 99.7
S3 – 99.35

The material has been provided by InstaForex Company – www.instaforex.com