USD/JPY is expected to trade with a bullish bias. Overnight US stocks continued to edge higher after trading in a narrow range with a light volume. The Dow Jones Industrial Average edged up 0.1% to 17623, the S&P 500 added 0.1% to 2051, and the Nasdaq Composite was up 0.3% at 4808.
Nymex crude oil rose 1.2% to $39.91 a barrel, gold fell 0.9% to $1243 an ounce, while the benchmark 10-year Treasury yield rebounded to 1.921% from 1.871% last Friday.
Meanwhile, closings on existing homes in the US dropped 7.1% MoM to a 3-month low of the 5.08M annual rate (vs 5.31M expected) in February.
On the forex front, the US dollar was boosted by hawkish comments by a number of Federal Reserve presidents, who pointed to another interest increase in April at the soonest. EUR/USD declined 0.3% to 1.1239, USD/JPY gained 0.3% to 111.93, USD/CAD rose 0.8% to 1.3100, and AUD/USD was down 0.3% to 0.7576.
At the same time, GBP/USD lost 0.8% to 1.4366 after Iain Duncan Smith, who supports "Brexit", resigned as the British Work and Pensions Secretary on Friday.
The pair has just broken above the key resistance at 111.25 as the ascending 20-period (30-minute chart) moving average is supporting a bullish bias. Meanwhile, the intraday relative strength index also remains above the neutrality level of 50. The intraday outlook has therefore turned bullish and the pair is expected to exceed the first upside target at 112.40 and rise toward the next one at 112.90.
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 112.40 and the second one at 112.90. In the alternative scenario, a short position is recommended with the first target at 111 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 110.60. The pivot point is at 111.25.
Resistance levels: 112.40, 112.90, 113.25
Support levels: 111, 110.60, 110