USD/JPY is expected to trade in a lower range. Overnight, the US stocks added to their gains as the rally in commodity shares continued. Buying activity was also seen in transportation and semiconductor sectors, while the consumer staples sector was under pressure. The Dow Jones Industrial Average added 0.5% to 16416, the S&P 500 edged up 0.2% to 1915, while the Nasdaq Composite was up 0.1% to 4509.
Nymex crude oil fell 1.7% to $31.72 a barrel, gold climber 1.1% higher to $1155 an ounce, while the benchmark 10-year Treasury yield declined to 1.864%, the lowest level since April, from 1.881% in the previous session.
While traders are watching closely the January US jobs report to be released tonight (vs 185K expected, 292K in December) for clues on the Federal Reserve's next move, the US dollar kept sliding overnight. EUR/USD gained another 0.9% to 1.1206, USD/JPY fell 1.0% to 116.74, USD/CHF dropped 1.1% to 0.9928, while NZD/USD was up 0.8% to 0.6720. The pair remains under pressure after breaking below the level of 117.00 overnight. The 20-period (30-minute chart) moving average, which stands below the 50-period one, is maintaining the bearish bias. As long as the key resistance at 117.35 is not surpassed, the pair should proceed to the first downside target at 116.50 .
The pair is trading below its pivot point. It is likely to trade in a lower range as long as it remains below the pivot point. Short positions are recommended with the first target at 116.50. A break of that target will move the pair further downwards to 116. The pivot point stands at 117.35. In case the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. According to that scenario, long positions are recommended with the first target at 117.80 and the second target at 118.25.
Resistance levels: 117.80, 118.25, 118.60
Support levels: 116.50, 116, 115.75