USD/JPY: Upside expected

Overview:
USD/JPY is consolidating with bearish bias after hitting three-week low of 98.86 on Monday. The rate is undermined by negative dollar sentiment as surprise fall in U.S. ISM manufacturing PMI to four-year low of 49.0 last month from 50.7 in April (vs forecast for rise to 51.0) and smaller-than-expected 0.4% increase in U.S. April construction spending (vs +0.7% forecast) increased odds that the Federal Reserve won’t scale back its $85 billion-per-month bond-purchase program anytime soon. USD/JPY is also weighed by Japan exporter sales. But USD/JPY losses are tempered by demand from Japan importers; Bank of Japan’s aggressive easing measures to help reach its 2% inflation target; likely gains in Nikkei today following overnight advances in U.S. stocks (S&P closed up 0.59%). Daily chart is negative-biased as MACD and stochastics are bearish, although latter is at oversold; five-day moving average is below 15-day MA and declining. 

Trading recommendations:  
The pair is trading above its pivot point. It is likely to trade in higher range as far as it remains above its pivot point. As far as the price is above its pivot point, trading in higher range is most favorable and buy position is recommended above its pivot with the first target at 100.8 and the second target at 101.3. You should keep in view short position below the pivot keep of the first target at 98.85, breach of this target will move the pair downward further and expect the second target at 98.5. The pivot point stands at 99.35. 

Resistance levels:
R1 – 100.8
R2 – 101.3
R3 – 101.6

Support levels:
S1 – 98.85
S2 – 98.1
S3 – 97.65

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