USD/JPY is expected to trade in higher range as 109.95 is in sight. Overnight U.S. stocks rallied again as bank and financial shares, encouraged by JP Morgan's better-than-expected earnings, performed well. The Dow Jones Industrial Average rose 1.1% to 17,908, the S&P 500 gained 1.0% to 2,082, and the Nasdaq Composite was up 1.6% to 4,947.
Nymex crude oil dropped 1.0% to $41.76 a barrel, gold also gave up 1.0% to $1,243 an ounce, while the benchmark 10-year Treasury yield eased to 1.764% from 1.781% in the previous session.
Meanwhile, the U.S. dollar posted a powerful rebound against most major currencies, with the Wall Street Journal Dollar Index rising 0.7% to 86.40. EUR/USD plunged 1.0% to 1.1272, USD/JPY climbed 0.7% to 109.33, GBP/USD lost 0.5% to 1.4202, and USD/CHF surged 1.3% to 0.9667.
At the same time, commodities-linked currencies gave up part of gains made in previous sessions. USD/CAD increased 0.4% to 1.2815 and AUD/USD declined 0.4% to 0.7652.The pair continues to ride on a rising trend line and is striking against the immediate resistance at 109.95. Currently, the ascending 20-period (30-minute chart) moving average, which stands on the 50-period one, is providing support. Also, the intraday relative strength index is well directed above the neutrality level of 50, calling for a new upleg. A break above 109.95 would trigger a further rise toward 110.50.
Trading Recommendation:
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. Therefore, long positions are recommended with the first target at 109.95 and the second one, at 110.50. In the alternative scenario, short positions are recommended with the first target at 108.45 if the price moves below its pivot points. A break of this target is likely to push the pair further downwards, and one may expect the second target at 107. The pivot point is at 108.80.
Resistance levels: 109.95, 110.50, 111
Support levels: 108.45, 108.05, 107.75
The material has been provided by InstaForex Company - www.instaforex.com