USD/JPY is expected to rebound. US indices pushed higher on Thursday led by shares in the banks, pharmaceutical biotechnology and life sciences, and diversified financial sectors. The Dow Jones Industrial Average gained 217 points, or 1.3%, to 17,141.75. The S&P 500 advanced 1.5%, while the Nasdaq Composite gained 1.8%. The yield on the 10-year U.S. treasury notes rose to 2.025%. Gold gained 0.7% to $1,187.90 a troy ounce. US crude oil futures lost 0.6% to $46.38 a barrel. On the economic data front, initial jobless claims dropped to 255,000 for the week ending on October 10, reaching the lowest level since 1973. The prior week reported a revised number of 262,000. Continuing jobless claims lowered to 2,158,000 for the week ending on October 3 from a revised figure of 2,208,000 the week before. The Empire State Manufacturing index rose to -11.36 in October from -14.67 in September. Minus 8 was the estimate. CPI decreased 0.2% on-month in September from a decrease of 0.1% in August, meeting expectations. The Philadelphia Fed Business Outlook Index rose to -4.5 in October from -6.0 in Sept. The US budget deficit narrowed to $439 billion from $483 billion a year ago. The greenback posted a rebound against common currencies.The pair stays above its key support at 118.60 and remains on the upside. The ascending 50-period intraday MA maintains a bullish bias, while the intraday RSI stands above its 50% neutrality area. Further upside is therefore expected with the next horizontal resistance and overlap set at 119.55 at first. A break above this level would call for further advance towards 119.90 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 119.55 and the second target at 119.90. In the alternative scenario, short positions are recommended with the first target at 118.05 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 117.75. The pivot point is at 118.60.
Resistance levels:119.55 119.90 120.25
Support levels: 118.05 117.75 117.45