Fundamental overview: USD/JPY is expected to consolidate as markets are awaiting 1230 GMT US May non-farm payrolls (forecast +225,000), unemployment rate (forecast 5.4%), and average hourly earnings (forecast +0.2%). USD/JPY is undermined by the flows to haven JPY amid increased risk aversion (VIX fear gauge rose 7.69% to 14.71, S&P 500 closed 0.86% lower at 2,095.84 overnight) after the International Monetary Fund slashed its forecasts for the US economic growth in 2015 to 2.5% from 3.1% in its April's prediction, and news that Greece would not make a scheduled EUR300 million loan repayment to the IMF on Friday. USD/JPY is also weighed by lower US Treasury yields (10-year fell 5.8 bps to 2.308% overnight) and Japan's exports. But USD/JPY downside is limited by demand from Japanese importers, ultra-loose Bank of Japan's monetary policy, and broadly firmer dollar undertone (ICE spot dollar index last 95.69 versus 95.37 early Thursday) after fewer-than-expected 276,000 US jobless claims in week ending May 30 (versus forecast 279,000), higher-than-expected 6.7% annual rate rise in US Q1 labor costs (versus forecast +6.0%), and positions adjustment ahead of the weekend.
Technical comment: The daily chart is mixed as the MACD is bullish; but stochastics is bearish at overbought levels.
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 125.25 and the second target at 125.80. In the alternative scenario, short positions are recommended with the first target at 123.60 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 122.90. The pivot point is at 124.15.
Resistance levels: 125.25 125.80 126
Support levels: 123.60 122.90 122.50
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