USD/JPY is expected to extend its upside movement as the bias remain bullish above 103.60. Although the pair has yet to break above the immediate resistance at 106.10, it keeps trading above the key support at 103.60. Currently, the intraday technical configuration is a bit negative - the pair has submerged below the 20-period (30-minute chart) moving average, which stands below the 50-period one, and the relative strength index remains below 50 - suggesting a continuation of the consolidation. However, as long as the key support at 103.60 is not breached, the pair is still expected to retest 106.10.
Market Commentary :
On Wednesday, US stock indexes were mixed even though the Dow Jones Industrial Average and the S&P 500 managed to inch up to new all-time highs. In fact, stocks stuck to extremely narrow trading ranges throughout the session.
The DJIA gained 0.1% to 18372, the S&P 500 edged up less than 1 point to 2152, while the Nasdaq Composite was down 0.3% to 5005, returning to the negative territory for the year. Telecoms, utilities and consumer staples gained the most, while energy shares were the biggest losers.
European stocks halted their recent rally, with the Stoxx Europe 600 declining 0.1%.
Nymex crude oil gave back all of the previous session's gain by tumbling 4.4% to $44.75 a barrel as US crude inventories fell less than expected last week. The benchmark US 10-year Treasury yield declined to 1.468% from 1.512% Tuesday. Gold rebounded 0.8% to $1342 an ounce, and silver was up 1.1% to $20.34 an ounce.
On the forex front, the British pound fell against the US dollar yesterday after rising 2.6%, or 335 pips, in a winning streak that spanned the prior three sessions, as the focus turned to the Bank of England's meeting tonight, where it is widely expected the central bank would lower its key interest rate to 0.25% from 0.50% and launch another round of quantitative easing to shield the economy from the fallout of last month's Brexit vote. GBP/USD dropped 0.7% to 1.3145 (day-high at 1.3336).
Meanwhile, EUR/USD climbed 0.3% to 1.1088, and USD/JPY declined 0.2% to 104.48 (day-low at 103.89), as a result the ICE Dollar Index was down 0.2% to 96.21.
The Canadian dollar strengthened against the greenback overnight after the Bank of Canada kept interest rates unchanged and expressed optimism on improvement in exports and business investment. USD/CAD lost 0.5% to settle at 1.2976 (day-low at 1.2936).
At the same time, AUD/USD eased 0.2% to 0.7605, and NZD/USD was down 0.3% to 0.7273.
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. Therefore, long positions are recommended with the first target at 106.10 and the second one, at 106.60. In the alternative scenario, short positions are recommended with the first target at 102.85 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 102.45. The pivot point is at 103.60.
Resistance levels: 106.10, 106.60, 107.10
Support levels: 102.85, 102.45, 101.85
The material has been provided by InstaForex Company - www.instaforex.com