USD/JPY is expected to trade in a lower range. It is more likely to continue its downward movement and is trading around the lower Bollinger band while those bands are widening and calling for further decline. Overnight U.S. stocks climbed further as the Federal Reverse's reduced rate-rise projection continued to boost investors' confidence. The commodity and industrial sectors gained the most. The Dow Jones Industrial Average rose 0.9% to 17481, achieving five days of gains in a row and turning positive for the year. The S&P 500 increased 0.7% to 2040, and the Nasdaq Composite was up 0.2% at 4774.
Nymex crude oil surged another 4.5% to $40.20 a barrel, the highest closing level since December 3. Gold was down 0.4% at $1257 an ounce, while the benchmark 10-year Treasury yield fell to 1.901% from 1.940% in the previous session.
Meanwhile, the U.S. dollar extended its weakness against most other major currencies, with the WSJ Dollar Index dropping another 1.1% to 86.63, the lowest level since June. EUR/USD rose 0.9% to 1.1317, USD/JPY plunged 1.1% to 111.37, USD/CHF dropped 1.0% to 0.9671, USD/CAD lost 0.9% to 1.2971, and NZD/USD surged 1.8% to 0.6845. At the same time, GBP/USD surged 1.6% to 1.4478, as the Bank of England kept interest rates unchanged and reiterated that rates should be likely to rise in the following three years. Also the intraday relative strength index is badly directed below the neutrality level at 50. The intraday outlook remains very bearish and the first downside target at 110.60 (around yesterday's low) is in sight. Support below that mark would be the psychological level of 110.00. Key resistance is located at 112.30.
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 110.60. A break of this target will move the pair further downwards to 110.30. The pivot point stands at 112.30. 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 113.05 and the second target at 113.45.
Resistance levels: 113.05, 113.45, 113.80
Support levels: 110.60, 110 , 109.45