USD/JPY is expected to range-trade. It is underpinned by the higher longer-dated US Treasury yields (10-year rose 4.1 bps to 2.412% Thursday) after a bigger-than-expected 0.9% on-month increase in the US May personal spending being the largest rise since August 2009 (versus forecast +0.7%). The pair is also boosted by the fewer-than-expected 271,000 US jobless claims for the week ended on June 20 (versus forecast 273,000), and the stronger-than-expected June Kansas City Fed manufacturing activity index of -9 (versus forecast -10). USD/JPY is also supported by the demand from Japan’s importers and the Bank of Japan’s ultra-loose monetary policy.
The daily chart is mixed as stochastics is rising from oversold levels, but the MACD is in bearish mode.
The pair is trading above its pivot point. It is likely to trade in a wider range as long as it remains above its pivot point. As long as the price holds above its pivot point, long positions are recommended with the first target at 124.35 and the second target at 124.60. In the alternative scenario, short positions are recommended with the first target at 123.25 if the price moves below its pivot points. A break of this target is likely to push the pair further downwards, and one may expect the second target at 122.85. The pivot point is at 123.60.
Resistance levels: 124.35 124.60 135
Support levels: 123.85 122.85 122.40
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