USD/JPY is showing strong downside momentum. Overnight, the US stocks edged lower after trading within a relatively tight range at the session. The Dow Jones Industrial Average declined 0.3% to 16413, the S&P 500 fell 0.5% to 1917, while the Nasdaq Composite was down 1.0% to 4487.
Nymex crude oil closed up 0.4% to $30.77 a barrel, gold rose 1.9% to $1,232 an ounce, while the benchmark 10-year Treasury yield declined to 1.760% from 1.819% at the previous session.
Meanwhile, the US dollar continued to strengthen against the euro, with EUR/USD edging down 0.2% to 1.1103, but reversed its course to drop against the yen, with USD/JPY falling 0.8% to 113.23. At the same time, the Australian dollar gave back some gains made at previous sessions as Australia reported the higher jobless rate. AUD/USD was down 0.4% to 0.7156. The pair has just broken below the level of 113.65 and is headed downward on strong momentum. The 20-period (30-minute chart), which stands below the 50-period one, is capping the pair's upward potential. At the same time, the intraday relative strength index, while being capped by a bearish trend line, is dropping toward the oversold level of 30. The intraday outlook is very bearish, and the pair could return to the first downside target at 112.25.
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 112.25. A break of this target will move the pair further downwards to 111.65. The pivot point stands at 113.65. 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 114.45 and the second target at 114.90.
Resistance levels: 114.45, 114.90, 115.25
Support levels: 112.25, 111.65, 111.25