Fundamental outlook:
USD/JPY is expected to consolidate with a bullish bias. Liquidity is thin in Asia today as financial markets in Japan are shut for a public holiday. USD/JPY is underpinned by the positive USD sentiment (ICE spot dollar index last 95.44 versus 95.25 early Monday), helped by stronger-than-expected 2.1% increase in U.S. March factory orders (versus forecast +1.9%). USD/JPY is also supported by the higher U.S. Treasury yields (10-year at 2.145% versus 2.117% late Friday) and ultra-loose Bank of Japan's monetary policy. But USD/JPY upside is limited by the buy-yen orders from Japan's exporters.
Technical comment:
The daily chart is mixed as MACD and stochastics are bullish, five-day moving average is above 15-day moving average and is advancing; but a bearish harami candlestick pattern was completed on Monday.
Trading recommendations:
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. As long as the price holds above its pivot point, long positions are recommended with the first target at 120.50 and the second target at 120.80. In the alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 119.55. A break of this target is likely to push the pair further downwards, and one may expect the second target at 119.20. The pivot point is at 119.90.
Resistance levels:
120.50
120.80
121.45
Support levels:
119.55
119.20
118.75
