USD/JPY is expected to consolidate with bullish bias after hitting a three-month high of 121.29 om Friday. USD/JPY is underpinned by the bullish dollar sentiment (ICE spot dollar index hit 11.5-year high 97.828 this morning, last 97.69 versus 96.33 early Friday) after the increase of 295,000 in the US February non-farm payrolls (versus forecast 240,000) and the US February unemployment rate of 5.5% (versus forecast 5.6%), while average hourly earnings rose only by 0.1% (versus forecast 0.2%). USD/JPY is also supported by the higher US Treasury yields (10-year at 2.24% versus 2.11% late Thursday), demand from Japan's importers and the ultra-loose Bank of Japan's monetary policy. The USD/JPY gains are tempered by the Japanese exports, flows to the safe-haven JPY and unwinding of JPY-funded carry trades amid increased risk aversion (VIX fear gauge rose 8.26% to 15.2, S&P 500 closed 1.42% lower at 2,071.26 Friday) as the robust non-farm payrolls report heightened expectations that the Fed could tighten monetary policy as soon as June. But risk sentiment is soothed by the data released on Sunday showing China's exports posting a strong 48.3% rebound in the USD terms in February (versus forecast 13.3%).
The daily chart is positive-biased as the MACD and stochastics are bullish, although the latter is at overbought levels. Five and 15-day moving averages are advancing.
The pair is trading above its pivot point. It is likely to trade in a higher range as far as it remains above its pivot point. As long as the price is keeping above its pivot point, a long position is recommended with the first target at 121.30 and the second target at 121.60. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 120.20. A break of this target would push the pair further downwards, and one may expect the second target at 119.85. The pivot point is at 120.50.
Uitgevoerd door, Analytische expert
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