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    Technical analysis of USD/JPY for April 04, 2016 2016-04-04

     

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    USD/JPY is expected to trade with a bearish bias. The pair has failed to post a sustained rebound following its decline below the 112.00 level last Friday. Last Friday US stocks rose, boosted by a strong March jobs report and other solid economic data. The Dow Jones Industrial Average rose 0.6% to 17792, the S&P 500 gained 0.6% to 2072, and the Nasdaq Composite was up 0.9% to 4914. Health-care and consumer-staples shares were leading performers, while energy shares fell along with oil prices.

    The US government reported that non-farm payrolls increased 215,000 in March (vs 205,000 expected, 245,000 in February), and average hourly earnings of private-sector workers were up 7 cents to $25.43 (vs -2 cents in February). Meanwhile, the ISM Manufacturing Index climbed to 51.8 in March (vs 51.0 expected) from 49.5 in February, and the University of Michigan Consumer Sentiment Index was up to 91.0 in March (vs 90.5 expected) from 90.0 in February.

    Nymex crude oil plunged 4.0% to $36.79 a barrel, gold declined 0.8% to $1,222 an ounce, while the benchmark 10-year Treasury yield edged up to 1.793% from 1.784% in the previous session.

    The US dollar edged lower against the euro in a session made volatile by the jobs report. EUR/USD was up 0.1% to 1.1386 (day-high at 1.1437, day-low at 1.1332).

    On the other hand, GBP/USD dropped 1.0% to 1.4220. The Markit/CIPS U.K. Manufacturing PMI was at 51.0 in March (vs 51.2 expected, 50.8 in February). And the TNS online poll on "Brexit" showed that the "In" and "Out" camps were neck-to-neck with each side getting a support of 35%.

    Meanwhile, the Canadian dollar weakened further along with plunging oil prices, with USD/CAD gaining 5 points to 1.3009 (day-high at 1.3146).

    Currently, USD/JPY remains capped by the descending 20-period (30-minute chart) moving average, which stands below the 50-period one. Meanwhile, the intraday relative strength index stays below the neutrality level of 50 lacking upward momentum. The intraday outlook continues to be bearish and the first downside target at 111.20 is within reach. Support below that level would be found at 111.00.

    Trading Recommendation:

    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 111.20. A break of this target will move the pair further downwards to 111.00. The pivot point stands at 112.00. 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 112.45 and the second target at 112.65.

    Resistance levels: 112.45, 112.65, 113.05

    Support levels: 111.20, 111.00, 110.65


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