Overview:
USD/JPY is consolidating after hitting one-week high of 98.28 Tuesday as markets await 1800 GMT U.S. FOMC interest rate decision. USD/JPY is underpinned by yen-funded carry trades amid positive risk sentiment (S&P closed up 0.56% at 1771.95 after hitting record high 1772.09 overnight) as investors expect the Federal Reserve to maintain its stimulus $85 billion-a-month bond-purchase program well into 2014. USD/JPY is also supported by 12.8% on-year increase in U.S. August S&P/Case-Shiller 20-city home price index (versus +12.5% forecast); demand from Japan importers. But risk sentiment is dented by tighter monetary policies in China and India (Reserve Bank of India on Tuesday raised its key interest rate by 25 bps to 7.75%), while dollar sentiment is hurt by surprise 0.1% on-month drop in U.S. September retail sales for first decline in six months (versus forecast for 0.1% increase); unexpected 0.1% on-month drop in U.S. September PPI (versus forecast for 0.2% increase); worse-than-expected drop in U.S. Conference Board consumer confidence index to six-month low of 71.2 in October (versus 74.0 forecast) from revised 80.2 in September (original estimate 79.7). USD/JPY upside is also limited by lower U.S. Treasury yields; Japan exporter sales.
Technical Comment:
Daily chart is positive-biased as stochastics is in bullish mode, MACD is turning bullish.
Trading recommendations:
The pair is trading above its pivot point. It is likely to trade in a higher range as far as it remains above its pivot point. As far as the price is above its pivot point, a long position is recommended with the first target at 98.45 and the second target at 98.7. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 97.75 the breach of this target will move the pair further downwards and one may expect the second target at 97.4. The pivot point stands at 98.
Resistance levels:
98.45
98.7
99
Support levels:
97.75
97.4
97
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Performed by Ahsan Aslam, Analytical expert InstaForex Group © 2007-2013 |
USDJPY: Upside Expected (Oct 30, 2013)
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