USD/JPY is expected to trade in a higher range, moving toward 109.95. Overnight, US stocks were mixed, with bank, transportation and energy shares trading higher, and shares in real estate, food & beverage, and semiconductor sectors being under pressure. The Dow Jones Industrial Average rose 0.1% to 17926, the S&P 500 was broadly flat at 2082, and the Nasdaq Composite was down less than 2 points at 4945.
Nymex crude oil declined another 0.6% to $41.50 a barrel, gold fell 1.0% further to $1,227 an ounce, while the benchmark 10-year Treasury yield settled at 1.781%, up from 1.760% in the previous session.
On the economic front, the US government reported that the CPI rose 0.1% month-on-month in March (vs +0.2% expected, -0.2% in February).
Meanwhile, the US dollar maintained its strength against most major currencies. EUR/USD edged down 6 points to 1.1266, USD/JPY gained 4 points to 109.37, and GBP/USD was down 0.4% to 1.4153. At the same time, USD/CAD rose 0.2% to 1.2843 and NZD/USD plunged 1.1% to 0.6842.
Boosted by a robust jobs report in Australia (the jobless rate dropped to a 2.5-year low of 5.7% in March), AUD/USD climbed 0.6% to 0.7695. The pair has just shot above the upper Bollinger band, calling for an acceleration to the upside. At the same time, the 20-period (30-minute chart) moving average is crossing above the 50-period one, and the intraday relative strength index is well directed above the neutrality level of 50, suggesting a new upleg. As long as the pair maintains its upward momentum, it should rise toward the first upside target at 109.95 (around the high of April 7) and then the second one at 110.50 (key resistance seen on April 6).
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