USD/JPY is expected to trade in higher range as bias remains bullish.S indices closed mixed on Friday. Shares in the banks ( 1.48%), materials ( 1.35%) and automobiles & components ( 0.68%) sectors traded higher. Shares in the utilities (-2.73%), household & personal products (-1.55%) and food, beverage & tobacco (-1.43%) sectors were under pressure. The Dow Jones Industrial Average ended down 0.3% to 16639.97, the S&P 500 fell 0.2% to 1948.05, and the Nasdaq Composite rose 0.2% to 4590.47.
Nymex crude oil slipped 0.9% to $32.78 a barrel, while gold fell 1.5% to $1,219.80 a troy ounce. The yield on the 10-year Treasury note rose to 1.766%, from 1.699%.
On the economic data front, U.S. GDP grew QoQ at a 1% annualized rate (estimated 0.4% gain), compared with an initial estimate of 0.7% in the prior period. The GDP price index in 4Q rose 0.9% (estimated 0.8%) compared with the initial estimate of 0.8% in the last period. U.S. dollar rose against most other major currencies. The pair remains on the upside and is currently testing the support of its rising 20-period moving average. The relative strength index still stands above 50. Even though a continuation of the consolidation cannot be ruled out, its extent should be limited. Further upside is therefore expected with the next horizontal resistance and overlap set at 113.50 at first. A break above this level would call for further advance toward 114.00 in extension.
Trading Recommendation: 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. Therefore, long positions are recommended with the first target at 113.50 and the second one at 114. In the alternative scenario, short positions are recommended with the first target at 111.95 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 111.30. The pivot point is at 112.50.
Resistance levels: 113.50, 114, 114.50
Support levels: 111.95, 111.30, 111.00