USD/JPY is expected to consolidate with bullish bias after hitting almost an 8-year high of 124.09 on Wednesday. USD/JPY is underpinned by the positive dollar sentiment (ICE spot dollar index last 97.29 versus 97.24 early Wednesday) on expectations that the Fed would increase interest rates later this year. USD/JPY is supported by the higher shorter-dated US Treasury yields (2-year at 0.648% versus 0.618% late Tuesday), demand from Japan's importers, and the Bank of Japan's ultra-loose monetary policy as well. The pair is also boosted by reduced safe-haven appeal of the yen and the yen-funded carry trades as global risk sentiment improved (VIX fear gauge eased 5.62% to 13.27; S&P 500 closed up 0.92% at 2,123.48 overnight) after Greek Prime Minister Tsipras said the country is close to an agreement with its international creditors over its rescue program. However, The Wall Street Journal reported that one European Union official is doubtful of Greece's ability to close a deal quickly. But USD/JPY gains are tempered by the Japanese exports.
The daily chart is positive-biased as the MACD is bullish, stochastics stays elevated at overbought levels, 5 and 15-day moving averages are advancing.
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 124.80 and the second target at 125.50. In the alternative scenario, short positions are recommended with the first target at 122.85 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 122.45. The pivot point is at 123.40.
Resistance levels: 124.80 125.50 126
Support levels: 122.85 122.45 121.70
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