Fundamnetal Overview:
USD/JPY is expected to consolidate in a higher range after hitting a near-six-year high at 105.71 on Friday (the highest since Oct. 3, 2008). USD/JPY is undermined by the weaker dollar sentiment after fewer-than-expected 142,000 increase in U.S. August non-farm payrolls (versus forecast +225,000). The unemployment rate is slipped to 6.1% last month from 6.2% in July, in line with the forecast, but that came as the labor-force participation rate fell to 62.8% from 62.9% in July. USD/JPY is also weighed by the lower shorter-dated U.S. Treasury yields (2-year at 0.512% versus 0.536% late Thursday as the U.S. yield curve steepened) and Japan exporter sales. But USD/JPY downside is limited by the demand from Japanese importers and reduced safe-haven appeal of the yen as the risk sentiment improves (VIX fear gauge eased 4.35% to 12.09; S&P 500 rose 0.5% to close at 2,007.71 on Friday) as the disappointing payrolls report relieves pressure on Federal Reserve officials to alter significantly their policy stance and the signal they've been sending of continued low interest rates after the expected end of their bond-buying program in October.
Technical comment:
The daily chart is positive-biased as MACD and stochastics are bullish, although latter is in the overbought zone, five and 15-day moving averages are advancing. .
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 long as the price is keeping above its pivot point, a long position is recommended with the first target at 105.70 and the second target at 105.90. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 104.70. A break of this target would push the pair further downwards and one may expect the second target at 104.35. The pivot point is at 104.95.
Resistance levels:
105.70
105.90
106.35
Support levels:
104.70
104.35
104
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