USD/JPY is expected to trade with bullish bias. The US indices jumped higher on Friday led by shares of the Technology Hardware and Equipment, Transportation and Health Care Equipment & Services sectors. The Dow Jones Industrial Average added 33.74 points, or 0.2%, to 17084.49. The S&P 500 added 1.46, or 0.1%, to 2014.89, and the Nasdaq Composite rose 19.68, or 0.4%, to 4830.47. Nymex crude futures hovered around $50 a barrel, while Gold edged 1% up to $1,156.30 a troy ounce. The yield on 10-year US Treasury notes fell to 2.099%, from 2.108% on Thursday. The US Import price index dropped 0.1% mom in Sept from a revised drop of 1.6% in Aug. (-0.5% estimate). On an annual basis, overall US import prices were 10.7% down. The US dollar tumbled to a three-week low against the euro on Friday as investors continued to bet against the US interest rate hike in coming months. The pair is reversing up after breaking above its 20-period and 50-period intraday MAs. The intraday RSI is around 50 lacking downward momentum. Further upside is therefore expected with the next horizontal resistance and overlap set at 119.85 at first. A break above this level would call for further advance toward Oct 6 high at 120.65 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. As long as the price holds above its pivot point, long positions are recommended with the first target at 120.65 and the second target at 120.90. In the alternative scenario, short positions are recommended with the first target at 119.45 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 119.85.
Resistance levels:120.65 120.90 121.45
Support levels: 119.45 119.20 118.75