USD/JPY is expected to trade with bullish bias above 119.55.Overnight, US stocks were little changed as investors exercised caution at the start of the fourth quarter and before Friday's payrolls report. The DJIA slipped 0.1% to 16,272, the S&P 500 added 0.2% to 1,923, and the Nasdaq gained 0.2% to 4,627. Nymex crude oil settled down 0.8% at $44.74 a barrel, while gold slid 0.1% to $1,113 an ounce. The 10-year Treasury yield fell to 2.042% from 2.061% in the previous session. Speaking of economic data in the US, initial jobless claims were at 277,000 for the week ended on September 25 (vs. plus 271,000 expected, plus 267,000 in the prior week). The ISM Manufacturing PMI was at 50.2 in September (vs. 50.6 expected, 51.1 in August). The US dollar weakened against most other major currencies. The pair keeps testing and bouncing from the key support at 119.55. Currently, it is trading on the upside while being supported by the 20-period intraday moving average. The intraday relative strength indicator manages to stay above the neutral level at 50. As long as 119.55 holds as the key support, the pair is expected to rise towards the first upside target at 120.35 (the high of September 30).
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 120.35 and the second target at 120.65. In the alternative scenario, short positions are recommended with the first target at 119.20 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 119.00. The pivot point is at 119.55.
Resistance levels: 120.35 120.65 121
Support levels: 119.20 119.00 118.70