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    GBP/JPY Around 123.50 Today - Analysis for July 5, 2012

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    USD/JPY is expected to consolidate with risks skewed higher after hitting a nine-day low 118.88 on Thursday. It is underpinned by the reduced safe-haven appeal of the yen amid positive risk sentiment (VIX fear gauge eased 7.41% to 12.74; S&P 500 finished up 1.08% at record closing high 2,121.10 overnight) on fewer-than-expected 264,000 US jobless claim in the week ended May 9 (versus forecast 273,000) and signs of stability in bond markets after the recent sell-off as European Central Bank President Draghi reaffirmed his commitment to the massive bond-buying program aimed to stimulate the eurozone's economy. USD/JPY is also supported by the demand from Japan's importers and the Bank of Japan's ultra-loose monetary policy.

    Technical comment:

    The daily chart is still negative-biased as the MACD and stochastics are in bearish mode, five-day moving average is falling below 15-day moving average.

    Trading recommendations:

    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 124.35 and the second target at 124.60. In the alternative scenario, short positions are recommended with the first target at 123.35 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 123.10. The pivot point is at 123.60.

    Resistance levels: 124.35 124.60 124.90

    Support levels: 123.35 123.10 122.65


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