USD/JPY is expected to trade with bullish bias as the pair is expected to move further upside. Overnight, US stocks advanced to a more than a two-week high with the Dow Jones Industrial Average gaining 1.4% to 16,599, the S&P 500 rising 1.3% to 1,978, and the Nasdaq Composite climbing 1.1% to 4,860. Nymex crude oil increased 1.3% to $44.59 a barrel, and gold was 0.4% lower at $1,103 a troy ounce. US government bonds witnessed a sell-off, with the 10-year Treasury yield surging to 2.281%, the highest level since July 22, from 2.181% on Monday. Meanwhile, the US dollar strengthened against other major currencies as data showed that US retail sales rose 0.2% MoM in August (vs +0.3% expected, +0.7% in July). The pair is posting a strong rebound from yesterday's low of 120.10. The 20-period intraday moving average (MA) has crossed above the 50-day one, and the intraday relative strength indicator (RSI) stays within the buying area between 50 and 70. The intraday outlook remains bullish and continuation of the rebound is expected. The first upside target is set at 120.95 (yesterday's high); and the second one, at 121.30 (around the high of September 11).
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 120.95 and the second target at 121.30. In the alternative scenario, short positions are recommended with the first target at 119.75 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 119.35. The pivot point is at 120.10.
Resistance levels: 120.95 121.30 121.70
Support levels: 119.75 119.35 119.10
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