USD/JPY is expected to trade in a higher range today. Overnight, US stocks rebounded after Tuesday's sharp declines. The Dow Jones Industrial Average climbed 1.8% to 16351, the S&P 500 also gained 1.8% to 1948 and the Nasdaq Composite rose 2.5% to 4749. Nymex crude traded with rising volatility and settled up 1.9% to $46.25 a barrel, while gold slid 0.5% to $1133 an ounce and the 10-year Treasury yield stepped up to 2.193% from 2.174% on Tuesday. Meanwhile, the US dollar regained footing and strengthened broadly against other major currencies, with EUR/USD dropping 0.8% to 1.1226 overnight, USD/JPY gaining 0.8% to 120.32 and USD/CHF rising 1.1% to 0.9685. Regarding USD/JPY, the pair is approaching the first upside target at 12.055, with support provided by the rising 20- and 50-period intraday moving averages (MAs). The intraday RSI is riding on a bullish trend line and placed within the buying area between 50 and 70. The second upside target is set at 121.40 (a base formed on August 31). Only a break below the key support at 119.65 would turn the intraday outlook bearish and call for further decline.
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 121.05 and the second target at 121.40. In the alternative scenario, short positions are recommended with the first target at 119.60 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 119.20. The pivot point is at 119.90.
Resistance levels: 121.05 121.40 121.75
Support levels: 119.50 119.20 118.85