USD/JPY is expected to trade in a higher range. It is underpinned by the positive dollar sentiment (ICE spot dollar index last 94.32 versus 94.06 early Monday) after the strongest increase in nearly six years of 5.1% in the US May existing home sales (versus forecast +4.2%). USD/JPY is also supported by the higher US Treasury yields (10-year rose 10.7 bps to 2.374% Monday), demand from Japan's importers, the Bank of Japan's ultra-loose monetary policy. the pair is also boosted by reduced safe-haven appeal of the yen as global risk sentiment improves (VIX fear gauge eased 8.74% to 12.74, S&P 500 closed up 0.61% at 2,122.85 overnight) on the strong US housing data and signs of progress in Greece's bailout negotiations. But USD/JPY gains are tempered by the Japanese exports.
The daily chart is mixed as the MACD is bearish, but stochastics is turning bullish at oversold 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 124.30 and the second target at 124.60. In the alternative scenario, short positions are recommended with the first target at 122.95 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 122.55. The pivot point is at 123.55.
Resistance levels: 124.30 124.60 125
Support levels: 122.95 122.55 122
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