Fundamental overview:
USD/JPY is expected to trade in a higher range. Liquidity was thin later in global day as financial markets in the U.S. were shut for a public holiday. USD/JPY is underpinned by the yen-funded carry trades amid improved investor risk sentiment (VIX fear gauge eased 6.43% to 20.95; S&P 500 closed up 1.34% at 2,019.42 Friday) on stronger-than-expected rise in University of Michigan preliminary consumer sentiment index to decade-high 98.2 in January from final December reading of 93.6 (versus forecast 94.4), while a 0.8% on-year rise in U.S. December CPI for slowest annual rise since October 2009 stoke expectations that the Federal Reserve could delay raising interest rates. USD/JPY is also supported by the positive dollar sentiment (ICE spot dollar index rose to 11-year high 93.262 Friday, last 92.65 versus 92.18 early Friday) as above-forecast U.S. consumer sentiment outweighs unexpected 0.1% on-month decline in U.S. December industrial production (versus forecast for no change) and lower-than-expected 79.7% U.S. December capacity utilization (versus forecast 79.9%), higher U.S. Treasury yields (10-year at 1.815% versus 1.775% late Thursday), demand from Japan's importers and Bank of Japan's large-scale monetary easing policy. But USD/JPY gains are tempered by Japan's export sales.
Technical comment:
Daily chart is mixed as MACD is bearish, five- and 15-day moving averages are declining but bullish-piercing candlestick pattern completed on Friday, stochastics is turned bullish at oversold levels.
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 0.7825117.95 and the second target at 118.50. In an alternative scenario, if the price moves below its pivot points, short posisitions are recommended with the first target at 116. A break of this target would push the pair further downwards and one may expect the second target at 115.50. The pivot point is at 116.80.
Resistance levels:
117.95
118.50
119
Support levels:
116
115.50
115
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