Fundamental outlook:
USD/JPY is expected to consolidate in a higher range as markets are awaiting the US April non-farm payrolls (forecast +228,000), unemployment rate (forecast 5.4%), and average hourly earnings (forecast +0.2%). USD/JPY is buoyed by improved USD sentiment (ICE spot dollar index last 94.60 versus 94.14 early Thursday) after fewer-than-expected US jobless claims that hit 265,000 in a week ended May 2 (forecast 275,000), larger-than-expected $20.52 billion increase in the US March consumer credit (versus forecast +$16.0 billion), and March consumer credit (versus forecast +$16.0 billion). USD/JPY is also supported by demand from Japan importers, ultra-loose Bank of Japan's monetary policy, and reduced safe-haven appeal of the yen amid diminished risk aversion (VIX fear gauge eased 0.13% to 15.13; S&P 500 closed up 0.38% at 2,088.00 overnight). But USD/JPY gains are tempered by the lower US Treasury yields (10-year at 2.178% versus 2.240% late Wednesday), Japan export sales, and position adjustment ahead of the weekend. The yen crosses vulnerable to China April trade data due out around 02:00 GMT (surplus forecast $42.9 billion, exports forecast +2.5% on-year, imports forecast -10.0% on-year).
Technical comment:
The daily chart is mixed as the MACD is bullish, but stochastics is in bearish mode.
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. A break of this target is likely to push the pair further downwards, and one may expect the second target at 118.75. The pivot point is at 119.40.
Resistance levels:
120.50
120.80
121.45
Support levels:
119
118.75
118.30
