USD/JPY is expected to continue with the upside movement. Overnight, US stocks marched higher amid higher GDP growth, a rally in the Asian and European markets, and soaring oil prices. The Dow Jones Industrial Average rose 2.3% to close at 16,654, the S&P 500 gained 2.4% to 1,987, and the Nasdaq Composite increased 2.5% to 4,812. The US government reported that 2Q GDP grew at an annualized rate of 3.7% (vs 2.3% previously estimated), and initial jobless claims fell to 271K for the week ended August 22 (vs 277K in the prior week). Crude oil soared 10.3% to settle at $42.56 a barrel, the largest percentage gain since March 2009. Meanwhile, gold edged down 0.2% to $1122 an ounce and the 10-year Treasury yield fell to 2.168% from 2.172% in the previous session. Encouraged by the upbeat economic data, the US dollar also climbed higher. EUR/USD touched as low as 1.1201, GBP/USD as low as 1.5369, and USD/JPY was up to 121.40. Regarding USD/JPY, the pair remains on the upside and is still trading within a bullish channel. Support is given by the 20-period intraday moving average (MA), which is above the 50-period one. Besides, the intraday RSI is well-directed and supported by a rising trendline. The continuation of the current rebound could bring the pair to the first upside target at 121.75 (last seen on August 24).
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 121.75 and the second target at 122.35. In the alternative scenario, short positions are recommended with the first target at 119.40 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 118.90. The pivot point is at 120.25.
Resistance levels: 121.75 122.35 122.80
Support levels: 119.40 118.90 118.45