USD/JPY is expected to continuation the rebound. Last Friday, the US stocks rebounded 2%, halting a 5-session slide. Energy and materials shares were up along with soaring oil prices. Nymex crude oil gained 12.3% to $29.44 a barrel, which is the biggest daily percentage gain since February 2009. Financial shares, which had been recently beaten down, also enjoyed strong buying. The Dow Jones Industrial Average rose 2.0% to 15973, the S&P 500 increased 2.0% to 1864, while the Nasdaq Composite was up 1.7% to 4337.
As market sentiment improved, gold retreated 0.7% to $1238 an ounce, and the benchmark 10-year Treasury yield climbed to 1.746% from 1.642% on Thursday.
Meanwhile, the US dollar reclaimed some ground lost during the previous week. USD/JPY rose 0.7% to 113.20 after the Japanese financial minister warned of taking appropriate actions against the surging yen. EUR/USD dropped 0.6% to 1.1258 and NZD/USD plunged 1.3% to 0.6629. On the other hand, GBP/USD gained 0.2% to 1.4505 and USD/CAD was down 0.6% to 1.3845. The pair is continuing on its rebound initiated at last Friday's low of 111.63. It has opened with a bullish gap this morning, trading between the upper Bollinger band and the 20-period (30-minute chart) moving average. The ascending 20-period moving average stays above the 50-period one, while the intraday relative strength index is well directed within the buying area between 50 and 70. As long as such a bullish bias persists, the pair should reach the first upside target at 114.45 and in extension the second one at 115.25 .
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 114.45 and the second target at 115.25. In the alternative scenario, short positions are recommended with the first target at 112.35 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 111.60. The pivot point is at 113.00.
Resistance levels: 114.45, 115.25, 115.85
Support levels: 112.35, 111.60, 111.25