USD/JPY: Upside prevails

Overview:
USD/JPY is consolidating with bullish bias after hitting four-year high of 102.05 this morning. The rate is underpinned by positive dollar sentiment on Wall Street Journal article that Federal Reserve officials have mapped out a strategy for winding down the Fed’s $85 billion-a-month bond-buying stimulus program–in careful and potentially halting steps, varying their purchases as their confidence about the job market and inflation evolves–although the timing on when to start is still being debated; still, WSJ report bolstered view that the U.S. central bank is likely to wind up its extraordinary stimulus measures well before other major central banks do; Fed’s Esther George saying Friday she wants to see the Fed begin exiting its bond-buying program. USD/JPY is also supported by higher U.S. Treasury yields; weak yen sentiment on Bank of Japan’s aggressive easing measures to help reach its 2% inflation target; report Friday showing Japanese investors were net buyers of Y309.9 billion foreign bonds and Y28.0 billion foreign stocks during the week ended May 4, suggesting they were moving money out of the country following the BOJ’s recent drastic increase in its bond-purchasing program; Group of Seven leading industrialized nations at two-day meeting, ended Saturday, giving tacit approval to plunging yen as they reaffirmed their commitment not to use economic policy to seek weaker currencies and didn’t conclude Japan has broken that pact; USD demand from Japan importers and investment trusts. But USD/JPY gains tempered by Japan exporter sales; profit-taking on yen-shorts. Daily chart is positive-biased as MACD and stochastics are bullish, five-day moving average is above 15-day MA and advancing. 

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 102.05 and the second target at 102.4. You should keep in view short position below the pivot keep of the first target at 100.54, breach of this target will move the pair downward further and expect the second target at 99.95. The pivot point stands at 100.95 

Resistance levels:
102.05 (this morning’s high)
102.4
102.75

Support levels:
S1 – 100.54 (Friday’s low)
S2 – 99.95 (previous cap set April 11)
S3 – 99.65

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