USD/JPY: Upside prevails

Overview:
USD/JPY is consolidating as markets are waiting for Federal Reserve Chairman Bernanke’s testimony before Congress, scheduled at 14:00 GMT, and FOMC meeting minutes, due at 18:00 GMT. BOJ is expected to stand pat on monetary policy, but traders are focusing on how the central bank will respond to the volatile Japanese government bond market–some expect measures such as an increase in JGB buying to force yields lower. USD/JPY is undermined by weaker USD sentiment after two regional Fed presidents, James Bullard and William Dudley, indicated that they are committed to maintaining the monetary-policy status quo in the near term, assuaging concerns that the Fed could consider tapering its bond purchases in coming months. USD/JPY is also weighed by lower U.S. Treasury yields; Japan exporter sales. But JPY sentiment hurt after Japan Economy Minister Akira Amari said Tuesday he hoped foreign-exchange levels would settle at a level corresponding with the relative strength of the Japanese economy, modifying his comments made Sunday that had caused the yen to strengthen to 102.00 from 103.18. USD/JPY losses also tempered by demand from Japan importers and investment trusts; Bank of Japan’s aggressive easing measures to help reach its 2% inflation target. Daily chart is mixed as MACD is bullish, but stochastics is bearish at overbought; inside-day-range pattern was completed on Tuesday.

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 103.6 and the second target at 104. You should keep in view short position below the pivot keep of the first target at 102.83, breach of this target will move the pair downward further and expect the second target at 101.85. The pivot point stands at 102.6.

Support levels:
S1 – 102.08-102.00 band (Tuesday’s low-Monday’s low)
S2 – 101.83 (Thursday’s low)
S3 – 101.25 (May 14 low) 

Resistance levels:
R1 – 103.6
R2 – 104
R3 – 104.25

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