USD/JPY is expected to trade in a higher range. US indices pushed higher for the third day in a row on Thursday, lifted by shares in the Automobiles & Components ( 2.34%), Media ( 1.54%) and Energy ( 1.28%) sectors. The Dow Jones Industrial Average added 0.27% to 16944, the S&P 500 rose 0.35% to 1993.4 and the Nasdaq Composite gained 0.09% to 4707.4.
On the economic data front, initial jobless claims climbed by 6,000 to 278,000 in the week ended Feb. 27 (estimated 270,000) from 272,000 a year ago. Continuing jobless claims rose by 3,000 to 2.26 million in the week ended Feb. 20 (forecasted 2.25M) compared to 2.25 million. In other news, the U.S. services PMI declined in February, reaching 49.7 (estimated 50) from 53.2 in January. The U.S. composite PMI fell in February to 50 (forecasted 50.1), the lowest reading since October 2013, from 53.2 in January.
Nymex crude oil fell 0.3% to $34.57 a barrel, while Gold gained 1.7% to $1,264.1 an ounce. The yield on the 10-year Treasury note dropped to 1.830% from 1.848% yesterday. U.S. dollar went down against major currencies. The pair stays above its key support at 113.20 and remains on the upside. Meanwhile, the relative strength index is mixed to bullish. Even though a continuation of the consolidation cannot be ruled out, its extent should be limited. Further upside is therefore expected with the next horizontal resistance and overlap set at 114.20 at first. A break above this level would call for further advance toward 114.55 in extension.
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. Therefore, long positions are recommended with the first target at 114.20 and the second one at 114.50. In the alternative scenario, short positions are recommended with the first target at 112.85 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 112.50. The pivot point is at 113.20.
Resistance levels: 114.20, 114.50, 114.85
Support levels: 112.85, 112.50, 112.15