USD/JPY is expected to trade with bullish bias above 113.15. US stocks ended broadly flat overnight. Investors were waiting for releases of major economic data scheduled later this week, including Friday's March jobs report. The Dow Jones Industrial Average gained 0.1% to 17,735, the S&P 500 added less than 0.1% to 2,037, and the Nasdaq Composite was down 0.1% to 4,766.
Nymex crude oil declined 0.2% to $39.39 a barrel, gold gained 0.4% to $1,221 an ounce, while the benchmark 10-year Treasury yield eased to 1.870% from 1.902% in the previous session.
Meanwhile the U.S. government reported that personal income rose 0.2% on month in February (vs 0.1% expected, 0.5% in January), and personal spending growth remained unchanged at 0.1% on a monthly basis in February (as expected).
The US dollar weakened against most major currencies. EUR/USD gained 0.3% to 1.1197, GBP/USD rose 0.8% to 1.4252, USD/CAD dropped 0.7% to 1.3182, and AUD/USD was up 0.5% to 0.7543. At the same time, USD/JPY rose 0.4% to 113.43.
Investors should pay close attention to a speech delivered by US Federal Reserve Chairwoman Janet Yellen in New York tonight. The USD/JPY pair started a consolidation after running up to 113.68 yesterday. While intraday (30-minute chart) technical indicators (20-, 50-period moving averages, relative strength index) are mixed, calling for an extension of the consolidation, the pair remains above the key support at 113.15. As long as 113.15 holds as the key support, the intraday outlook remains bullish and the pair is expected to re-test the first upside target at 114.10.
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 114.10 and the second one at 114.50. In case of the alternative scenario, a short position is recommended with the first target at 112.85 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 112.35. The pivot point is at 113.15.
Resistance levels: 114.10, 114.50, 114.75
Support levels: 112.95, 112.35, 112