USD/JPY is expected to rebound. The US stocks staged a powerful rebound overnight, with the Dow Jones Industrial Average soaring nearly 4% to 16285, the S&P 500 gaining 3.9% to 1940, and the Nasdaq Composite rising 4.2% to 4697. Crude slid 1.8% to $38.60 a barrel, gold dropped 1.3% to $1125 an ounce, and the 10-year Treasury yield climbed further to 2.172% from 2.133% in the previous session. The US dollar countinued strengthening against other major currencies after the US government reported that durable manufactured goods orders increased 2% MoM in July (vs +0.1% expected) and revised June orders edged higher to post a 4.1% increase from 3.4%. EUR/USD fell as low as 1.1290, GBP/USD as low as 1.5450, and USD/JPY was up to 120.36. Meanwhile, USD/JPY remains on the upside and well supported by both the 20- and 50-period intraday moving averages (MAs). The intraday RSI is well directed within a buying area between 50 and 70. As long as 118.95 holds as the key support level, a rebound of the pair to the first upside target at 120.70 (a resistance level formed before Aug. 24’s plunge) is expected.
The pair is trading below its pivot point. It is likely to trade in a lower range as long as it remains below the pivot point. Short positions are recommended with the first target at 120.70. A break of that target will push the pair further downwards towards 121.30. The pivot point stands at 118.95. In case the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. According to that scenario, long positions are recommended with the first target at 118.20 and the second target at 117.
Resistance levels: 120.70 121.30 122.35 123
Support levels: 118.20 117 116.20
The material has been provided by InstaForex Company – www.instaforex.com