InstaForex - Analytics

    InstaForex

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    translated artical 2011-12-15

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    Overview:

    USD/JPY is expected to consolidate with bullish bias after hitting nine-day high at 102.14 on Tuesday. It is underpinned by the improved dollar sentiment on a surprising 0.8% increase in U.S. April durable goods orders (versus forecast for 0.7% fall); a rise in Conference Board U.S. consumer confidence index to 83.0 in May (matching forecast) from downwardly revised 81.7 in April (first reported as 82.3), stronger-than-expected 12.4% on-year rise in U.S. March S&P / Case-Shiller 20-city home price index (versus 11.8% forecast) and rise in Markit flash U.S. May services PMI to 26-month high of 58.4 in May from 55.0 in April. USD/JPY is also supported by the demand from Japan importers and positive risk appetite (S&P 500 hit all-time high 1,912.28 before closing up 0.6% at 1,911.91 overnight) on upbeat U.S. data, expectations of continued accommodative policies from the ECB and Federal Reserve. But USD sentiment is dented by drop in Dallas Fed's general business activity index to 8.0 in May from 11.7 in April. USD/JPY gains are also tempered by Japan exporter sales and lower longer-term U.S. Treasury yields as the yield curve flattened (10- & 30-year yields fell while 2- and 5-year yields edged higher overnight).

    Technical Comment:
    Daily chart is positive-biased as MACD and stochastics are bullish, five-day moving average is rising above 15-day MA.

    Trading recommendation:
    The pair is trading above its pivot point. It is likely to trade in a higher range as far as it remains above its pivot point. As far as the price is above its pivot point, a long position is recommended with the first target at 102.35 and the second target at 102.55. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 101.50. A breach of this target will push the pair further downwards and one may expect the second target at 101.20. The pivot point is at 101.70.

    Resistance levels:
    102.35
    102.55
    102.80

    Support levels:
    101.50
    101.20
    101


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